Genting’s (GENT) 2019 core-PATAMI of RM2,558m (+65% yoy) is above our expectation but within consensus, achieving 110% and 100% of our respective forecast. The results were driven by the betterthan-expected performance from its subsidiaries, Genting Singapore and Genting Malaysia. We have revised higher our 2019-20E EPS by 7.2%-10.9% and raised our TP to RM11.00 while maintaining our BUY call.

Resort World Las Vegas Still on Track

Management guided that Phase 1 of Resort World Las Vegas is still on track for its opening by mid-2020. Currently 57 floors out of the 68 have been completed. There is also no change to the capex guidance of USD4bn, and management has indicated that with the c. USD2bn project financing secured, there should not be any funding concern. Despite that, management did not provide clear indication on whether they could raise the dividend payout as the need to conserve capital has reduced, considering that they have secured sufficient funding for the Vegas project.

Share Price Performance Likely to be Dictated by Sentiment

We believe that the share price performance for GENT will likely be dictated by investor sentiment on both Genting Malaysia (GENM) and Genting Singapore (GENS). For GENS, news flow on the Japan IR bid is expected to intensify in coming months, as bids are expected to be submitted by end of 2019. For GENM, the on-going lawsuit against Fox with regards to the cancellation of the theme park will continue to come under the lime-light as the court case is expected to resume within the next few months.

Reaffirm BUY Call But With a Revised TP of RM11.00

We have raised our EPS for 2019-20E by 7.2%-10.9%, to factor in the performance of Genting Singapore and the lower effective tax rate for Genting Malaysia. We are reaffirming our BUY call on GENT with a higher RNAV-based 12-month TP of RM11.00 (from RM10.90). GENT’s valuation remains attractive, as the holding company discount is still above +1 SD of its past-5-year average.

Source: Affin Hwang Research - 28 Feb 2019