Period  4Q13/FY13

Actual vs. Expectations The FY13 core net earnings of RM1.77b is spot on our estimate but 11% below market consensus.

 We believe the variance from the market consensus could be due to the market estimating a lower minority interest which we already adjusted three months ago.

Dividends  No dividend was declared in the quarter which means there was no regular dividend in FY13 vs. our assumption of 6.4 sen NDPS. However, to recap, there was a 50 sen special GDPS declared in 2Q13.

Key highlights  The 4Q13 core earnings rose 7% QoQ to RM480.0m despite revenue sliding 7% over the quarter. This was due to (i) lower effective tax rate of 13% vs. 19%, and (ii) EBITDA of RM32.8m in the Investment & Other segment vs. a loss of RM187.5m. The losses reported in 3Q13 consist of: (i) RM39.5m unrealised exchange losses for Genting Plantations Bhd (GENP, MP; TP: RM10.85) arising from the weakening of IDR on USD denominated borrowing and (ii) a SGD55.1m (c.RM140m) net exchange loss incurred by Genting Singapore plc (GENS, NOT RATED).

 After a strong rebound in 3Q13, GENS reported 4Q13 PAT, which contracted by 24% QoQ due to a decline in casino business volume where the rolling chip volume dipped 4% and its market share dropped by 1% to 53%. As such, the adjusted EBITDA declined 26% while revenue fell 10%. However, non-gaming revenue rose 8% QoQ, attributable to higher visitor numbers and improved rates.

 Genting Malaysia Bhd (GENM, MP; TP: RM4.39) registered 4Q13 core earnings, which rose slightly by 2% QoQ, attributable to lower costs for its Malaysian VIP business while lower net bad debts were written off for its UK casinos. However, the RWNYC faced lower business volume while the new start-up RWB reported a loss of c.RM69m at the EBITDA level.

 Thanks to better CPO prices and higher FFB production, GENP reported yet another strong set of results in 4Q13 with core earnings surging 69% QoQ. The seasonally higher FFB volume leapt 20% to 463k mt from 386k mt while the average CPO selling price in 4Q13 was RM2,505/mt, up 6% from RM2,353/mt. The average palm kernel price also jumped 18% to RM1,548/mt from RM1,313/mt previously.

Source: Kenanga