Period  4Q13/FY13

Actual vs. Expectations 4Q13 core net profit of RM402.2m brought FY13 core net profit to RM1.59b which is within expectations; coming in just 1% below our estimate and 5% below market consensus.

Dividends  3.9 sen NDPS was declared, raising FY13 NDPS to 7.1 sen which was higher than FY12 NDPS of 6.6 sen and our assumption of 6.8 sen.

Key Results Highlights 4Q13 core earnings rose slightly by 2% QoQ to RM402.2m from RM395.6m previously, mainly driven by: (i) lower costs for its Malaysian VIP segment and (ii) lower net bad debts written off at its UK casinos. However, losses continued for its new start-up Resorts World Bimini (RWB) with negative EBITDA of c.RM69m in 4Q13.

 The Malaysian operations posted adjusted EBITDA which jumped 14% QoQ to RM544.7m on the back of a 1% hike in revenue. This was mainly attributable to lower costs in its premium players segment. However, the non-gaming unit was dragged down by the closure of its theme park for a massive make-over.

 In UK, the casino operations experienced a slight rise in revenue by 1% QoQ thanks to improved business volume while the lower net bad debts written off sent EBITDA higher by 127% over the quarter.

 The North America operations reported 4Q13 revenue, which declined by 5% due to a lower business volume from RWNYC while RWB is still in its early day of operations. At EBITDA level, this segment turned to a loss of RM21.2m after RWB reported higher losses of c.RM69m. The average daily win per machine for RWNYC dropped further to USD420 in 4Q13 from USD440 in 3Q13.

Outlook  The 5-year refurbishment program worth RM3b for RWG and the newly acquired RWB could be the new earnings catalysts to GENM. On the other hand, the yield management initiative should help to improve earnings while the RWNYC numbers should be sustainable. However, the UK operations could continue to see tougher times due to its VIP-centric nature.

Change to Forecasts   We keep our FY14 and FY15 estimates unchanged.

Rating Maintain MARKET PERFORM

Valuation  Our target price is maintained at RM4.39/SOP share.

Risks to Our Call

 Unfavourable luck factor.

Source: Kenanga