Genting’s (GENT) 9M19 core-PATMI of RM1,805m (-5.7% yoy) was above both ours and consensus expectation, achieving 81% and 79% of the respective forecast. We believe that the better-thanexpected performance was driven by the strong results from Genting Malaysia, which had benefited from the high hold percentage from its VIP segment. We have reduced our RNAV-based TP to RM7.25 as we review the fair value of its subsidiaries and the holding co discount, but maintain our BUY call.

Resort World Las Vegas Still on Track

Management is guiding for the Phase 1 of Resort World Las Vegas (RWLV) to be open by mid-2021, despite the recent announcement on the new amenities planned for the project. Due to the new amenities, the total project cost is now at US$4.3bn (from US$4bn), with approximately US$1.7bn incurred since the bagging of the project. Despite the increase in capex, management has indicated that that current funding is sufficient to cover the additional capex for the project.

Remain Cautious on Outlook

Although 9M19 performance of the group came in above our expectations, we remain cautious over the near-term prospects in view of the on-going trade tensions and the weak consumer sentiment, which would likely impact mass market spending pattern (lower discretionary spending). Genting Singapore (GENS) also provides credits to its VIP clients, and the risk of write-off could 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 a Lower TP of RM7.25

We have raised our 2019-21E EPS by 9.3%-18.4%, to factor in the latest forecast of its core subsidiaries. However, we have reduced our RNAVbased TP to RM7.25, as we update our valuation on its subsidiaries. We also use a higher holding co discount based on the latest 10-year average. Nevertheless, we are keeping our BUY call on GENT, as 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) fewerthan-expected high-roller arrivals.

Source: Affin Hwang Research - 29 Nov 2019