Period  1Q14

Actual vs. Expectations Within expectations. 1Q14 core net profit of RM566.1m made up 23% of our full-year estimates and 26% of market consensus.

Dividends  No dividend was declared, as expected.

Key Results Highlights 1Q14 core earnings grew 18% QoQ to RM566.1m while topline rose 7% over the quarter. The rise in earnings was attributable to the spectacular results from Genting Singapore plc (GENS, NOT RATED) which saw its EBITDA surging 59% to RM1.04b from RM657.6m in 4Q13.

 GENS enjoyed an impressive 1Q14 with PAT surging 51% QoQ thanks largely to the record high rolling chip volume of c.SGD18.6b, which rose 19%, coupled with improved luck factor of 3.0% from 2.5%. VIP market share improved to 59% from 53% in 4Q13 while non-VIP market share also inched up to 44% from 43% previously. As such, the adjusted EBITDA in MYR term surged 59% QoQ on the back of 21% hike in topline.

 Genting Malaysia Bhd (GENM, MP; TP: RM4.57) registered 1Q14 core earnings, which contracted 10% QoQ, no thanks to lower earnings from Malaysian and UK casino operations, although the UK casinos managed higher bad debts recovery in 1Q14. On the flipside, RWNYC reported higher business volume on higher win rate while new startup losses at RWB narrowed to RM52m from RM59m previously.

 Despite higher CPO prices by 6%, Genting Plantations Bhd (GENP, UP; TP: RM10.85) posted 1Q14 core earnings, which contracted 36% QoQ, mainly attributed to seasonally weak FFB production, which declined 19% to 377k mt from 463k mt in 4Q13. Average CPO selling price was RM2,659/mt in 1Q14 from RM2,505/mt in 4Q14 while average palm kernel price leapt 29% to RM1,994/mt from RM1,548/mt previously. Besides weaker plantation earnings, the property segment also reported lower EBITDA by 38% QoQ on lower property sales.

 The Power division reported a turnaround results with EBITDA of RM9.7m in 1Q14 from a loss of RM0.2m in 4Q13 which was partly due to lower generation by the Jangi Wind Farm in Gujarat, India. On the other hand, the Meizhou Wan Power Plant continued to be reclassified as discontinued operations (with a loss of RM33.4m in 1Q14 from profit of RM51.9m in 4Q13) following the disposal announcement on 13 Nov-13.

Outlook  The group earnings are expected to grow steadily in the coming years. In early-May’s conference call, the management of GENS remained cautiously optimistic of its casino operations given the slowdown in the

Chinese economy while one of its key markets, Indonesia is conducting its presidential election. The mass market will remain flattish in the coming months while the strong SGD against regional currencies would impact the non-VIP segment.

 GENM could continue to enjoy stable earnings on the resilient RWG earnings while the non-gaming earnings are set to soften on the closure of the outdoor theme park since Sep-13, but the impact would be minimal. While RWB which is still in its early day of operations may face challenges, RWNYC should be able to drive its USA earnings higher. Nonetheless, the earnings from Genting UK could be volatile given its VIP-centric profile while GENP should continue to enjoy strong earnings this year on the back of improved CPO prices.

Change to Forecasts No changes to our FY14-FY15 estimates.

Rating Maintain OUTPERFORM

Valuation  Our new price target is revised to RM12.50/share from RM12.81/share previously based on an unchanged 20% holding company discount to its SoP valuation. The adjustment is mainly due to: (i) roll-over of valuation base year to CY15 from CY14, (ii) the change in our target price for GENM, (iii) the open market value of GENS and Landmarks shares, and (iv) cash balance.

Risks to Our Call Poor luck factor.

 A sustained decline in CPO prices.

Source: Kenanga