Journey to Wealth

Genting Bhd - Takes up 20% stake in pharmaceutical company Buy

kiasutrader
Publish date: Wed, 21 Nov 2012, 11:15 AM
kiasutrader
0 27,456
Following Message

- Bloomberg  reported that TauRx Pharmaceuticals Ltd (TauRx) has received further investment of US$31.5mil from Genting Management (S) Pte Ltd, which is a subsidiary of Genting Bhd. 

- The amount represents the first tranche of a total investment of US$111.8mil by Genting in TauRx in exchange for a 20% equity stake in the pharmaceutical company. 

- The completion of the remaining US$80.3mil investment by Genting is expected to take place before year-end. TauRx announced that Tan Sri Lim Kok Thay would be appointed to the company's Board of Directors. 

- TauRx's headquarters are in Singapore. However, its research facilities are in Aberdeen, Scotland. TauRx aims to develop new treatments and  diagnostics for a range of neurodegenerative diseases. 

- It is currently involved in the development of LMTX drug, which aims to treat patients with mild to moderate Alzheimer's disease.

- We are neutral on Genting Bhd's investment. Although the investment sum of US$111.8mil or RM342mil is not huge, we are puzzled over the rationale of the investment as it is not part of Genting Bhd's core operations. In 2010, Genting Bhd invested in a 20% equity stake in Union Bank of Colombo, Sri Lanka.

- The shareholding of 20% would allow Genting Bhd to equity-account TauRx's financials. However, as the development of the LMTX drug is still on-going, we doubt if there would be any earnings contribution.

- We estimate that at the company level, Genting Bhd has more than RM3bil in cash reserves. This is due to the disposal of Genting Sanyen Power Plant to 1MDB for RM2.3bil and issuance of RM2bil MTN in June 2012. As at end-FY11, Genting Bhd's net cash at the company level stood at RM586.5mil. 

- Currently, we have a BUY recommendation on Genting Bhd. The group is scheduled to release its 3QFY12 results next week.   

Source: AmeSecurities
GENTING (3182)
Related Stocks
More articles on Journey to Wealth
Ekovest: No plan to launch another offer for Iskandar Waterfront City

Created by kiasutrader | Mar 29, 2018

Ekovest fails to get shareholders nod for IWCity takeover

Created by kiasutrader | Mar 29, 2018

King Wan (S$0.280) Wins $28.4m deals

Created by kiasutrader | May 17, 2013

Insurance - Key Points In BNM, IMF Reports

Created by kiasutrader | Mar 25, 2013

SapuraKencana Petroleum - Positive Outlook

Created by kiasutrader | Mar 25, 2013

Kenanga Research - On our Portfolio - Parliament dissolution around the corner?

Created by kiasutrader | Mar 25, 2013

SapuraKencana Petroleum - 4Q13 Analyst Briefing Key Updates

Created by kiasutrader | Mar 25, 2013

Plantation - Dorab Mistry turned less bearish on CPO Prices

Created by kiasutrader | Mar 25, 2013

Plantation Sector - Proposed accounting standard scrapped OVERWEIGHT

Created by kiasutrader | Mar 25, 2013

Pavilion Reit - Limited upside, earnings upside have been priced in HOLD

Created by kiasutrader | Mar 25, 2013

Discussions
Be the first to like this. Showing 3 of 3 comments

KC Loh

LKT seems to be out of ideas. This may be profitable in future, but as the analyst correctly mentioned, not their core operations! what signal is he giving to the investment frat? no more interested in pursuing Echo?

2012-11-21 12:28

moven00

LKT and Genting is feeling the pressure to deliver and expand its profit.
Well, pharmaceutical might sounds interesting to many. But reality bits. It is a long and tough journey. Simply look at gain such as Pzifer and Roche. They are also research pharmaceutical company, amid Giant of pharmaceutical. But also struggling and make lotsa research that cost billions yet still not that successful. This Giant even have to close down some of their factories in US.

2012-11-21 14:17

winwinwin

Genting shares will get dumped....this is similar to Gamuda buying some phone company many years ago.....once you stray....you won't be loved !

2012-11-22 15:21

Post a Comment