We are maintaining our BUY call on Genting Bhd (GENT) with an unchanged TP of RM12.06, as 1QFY17 PATAMI of RM603mn is running ahead of both our and consensus estimates, as it constitutes 30% and 27% of our respective forecast. The strong numbers were due to higher contribution from Genting Singapore, which benefited from its cost optimisation strategy and the gain from the sale of its stake in Resort World Jeju.

RWLV Has Officially Been Delayed Till 2020

Despite the Resort World Las Vegas is now being officially delayed till 2020 (no concrete time line on the opening date), management maintained its capex guidance at USD$3.3bn. The delay will not have a significant impact on our RNAV, as it only constitutes 1% of our overall RNAV.

Singapore Is the Standout Among Its Core Listed Subsidiaries

Genting Singapore (GENS) which has reported earlier, delivered a relatively good set of numbers, due to the both the gain in disposal of its stake in Resort World Jeju, and also margin expansion from the lower impairment of its receivables. GENS contributed more than 50% of the group EBITDA in the quarter, and is also 46% of our overall RNAV.

Better Contribution From Non-core

Its non-core operation for both Power and Oil & Gas, has delivered >100% EBITDA growth in the quarter to RM121.5mn (from 54.7mn in 1QFY16). The power segment was mainly due to the recognition of construction profit of the Banten coal-fired power plant, where else the oil & gas segment has benefited from the higher crude oil price despite lower production numbers. These two segments contribute 1.5% of our overall RNAV.

Maintain BUY With Unchanged TP of RM 12.06

We are keeping our BUY call on GENT with an unchanged TP of RM12.06, as the holding co discount is still +1 Stdev above its historical means. Newsflow from the Japan legislative about the IR bill is likely going to sway the share price movement for both GENS SP and GENT MK. Risks to our call include changes in luck factor and lower-than-expected VIP arrivals

Source: Affin Hwang Research - 30 May 2017