Journey to Wealth
Genting Bhd - Overseas casino contribution overtake Malaysia's BUY
Affirm BUY on Genting Bhd with an unchanged RNAVbased fair valueof RM11.85/share. Genting's core net profit was within our expectations. Ifconsensus estimates had included exceptional items, then Genting Bhd's resultswould have also been in line with market expectations.
Genting Bhd's revenue expanded by 29% YoY to RM19.6bil inFY11 underpinned by strong contributions from the UK and Singapore.
The group's EBITDA climbed 14% YoY to RM8bil in FY11 asearnings from Genting Singapore PLC rose 19% and profits from the UK improvedby 74%.
These two casino divisions more than compensated for a lossof RM66.9mil in the oil and gas division in FY11.
Although there is no revenue from the oil and gas division, thedivision incurred a loss due to general and administrative expenses.
We understand that Genting Bhd would be implementing a developmentplan for the Kasuri Block. Capex for the oil and gas division is expected to beRM247mil in FY12F.
Recall that the Kasuri PSC (production sharing contract) is theonly oil and gas asset left in Genting Bhd after the group sold two PSCs inIndonesia to AWE Ltd for RM121mil early this year.
EBITDA of the power division rose 16% YoY to RM632mil, underpinnedby higher volume of production and tariff hike in China.
We understand that Genting Bhd is still negotiating with TenagaNasional Bhd for a power purchase agreement for its Genting Sanyen power plant,which is due to expire in FY15F.
Genting Bhd has only declared a final gross DPS of 4.5 sen less25% tax. This brings total gross DPS to 8 sen less 25% tax for FY11. The grossDPS of 8 sen for FY11 (FY10: 7.8 sen) translates into a yield of only 0.8%.
We gather that FY11 dividend payments were meagre as thegroup is conserving cash for its expansive capex plan. Genting Group's capex isestimated at RM4.5bil for FY12F.
Source: AmeSecurities
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