Genting’s (GENT) 6M19 core-PATAMI of RM1,228m (+0.3% yoy) was above our expectation but within consensus, achieving 60% and 53% of respective forecasts. The better-than-expected performance was due to the strong results from its subsidiary, Genting Malaysia (GENM). We have revised our 2019E earnings to factor in the betterthan-expected 6M19 performance of its subsidiaries but maintain our TP unchanged at RM9.00 and reiterate our BUY call.

Resort World Las Vegas Still on Track

Management is still guiding for Phase 1 of Resort World Las Vegas (RWLV) to be on track for its opening by mid-2020. RWLV has completed concrete work for both the West and East Tower, topping off at 69th level. Structural steel construction has been completed for the low-rise casino podium. The total capex guidance remains unchanged at US$4bn, approximately US$1.5bn was incurred as of end 2Q19.

Remain Cautious About the Outlook

Although 6M19 performance of the group came in above our expectations, we remain cautious about the near-term prospects in view of the on-going trade tension and the weak consumer sentiment, which would likely impact mass market spending pattern (lower discretionary spending). Genting Singapore (GENS) also provide credits to its VIP clients, and the risk of write-off could also increase in the event of an all out trade war. New casino opening in the region are also increasing the competition for VIP clients.

Reaffirm BUY Call But With An Unchanged TP of RM9.00

We have raised our 2019-21E EPS by 1.4%-11.2%, to factor in the solid 6M19 performance of its subsidiaries (ie. GENM). We are reaffirming our BUY call on GENT and maintain our SOTP-based TP of RM9.00. We believe GENT’s valuation remains attractive, as the holding company discount is still above +1 SD of its past-5-year average. Key downside risk to our call include: 1) further delays to the opening of its theme park; and 2) fewer-than-expected high-roller arrivals.

Source: Affin Hwang Research - 30 Aug 2019