Journey to Wealth
Genting Malaysia - 2Q12 in line, all round improvement
Period 2Q12
Actual vs. Expectations
The 2Q12 core profit of RM497.8m came in within expectations.
This brought 1H12 core profit to RM815.8m, which accounted for 53% of our FY12 full-year estimate and 51% of the market consensus.
Dividends A 3.8 sen GDPS was declared in 2Q12, the same as that of last year.
Key Results Highlights
The 2Q12 headline net profit leapt 83% QoQ to RM495.8m, on a broad base improvement in its casino operations, with revenue rising 11%. YoY, net profit expanded 58% while revenue gained 38%.
The home turf casino operations reported an adjusted EBTDA which grew 21% QoQ in 2Q12 on a 7% hike in revenue. This was due to a higher hold percentage despite a lower business volume in the VIP market. YoY, its Malaysian casino posted an adjusted EBTDA that rose 8% while revenue increased 5%.
UK casinos reported strong numbers, especially the London casinos. The 2Q12 adjusted EBITDA jumped to RM130.1m from RM34.5m in 1Q12 on higher business volume as revenue rose 38%. YoY, it turned profitable from the negative adjusted EBITDA of RM7.8m in 2Q11 while revenue surged 153% YoY.
USA operations achieved good results as its adjusted EBITDA soared to RM60.7m in 2Q12 from RM1.7m in 1Q12 despite revenue dropping slightly by 1%. YoY, the adjusted EBITDA doubled from 2Q11 although its revenue dipped 40% as 2Q11 results included a RM363.1m construction revenue.
Outlook FY12 will be a stronger year than FY11 as RWG's earnings continue to be resilient with a recovery of its UK operations on hand as well as it getting a full year earnings contribution from RWNYC.
Change to Forecasts
No changes to our FY12-FY14 estimates
Rating MAINTAIN OUTPERFORM
Valuation We reiterate our price target of RM4.18/SOP share.
Risks Unfavourable luck factor.
Source: Kenanga
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