Period

1Q15

Actual vs. Expectations

At 33%/36% of our/market consensus full-year estimates, the 1Q15 core net profit of RM718.9m came above expectations.

The main discrepancy with our forecast was due to lower-than-expected minority interest. At PAT level, the core PAT made up 27% of our full-year estimates which seem to be in line.

Dividends

No dividend was declared as expected. Key

Results Highlights

Despite topline dipping 6%, 1Q15 core earnings rose 19% QoQ to RM718.9m from RM605.5m in 4Q14, due mainly to: (i) MI as mentioned above, and (ii) better Genting Singapore plc’s (NOT RATED) results in MYR term.

In fact, Genting Singapore posted PAT, which declined sharply by 21% QoQ to SGD91.7m, no thanks to a sharp drop in the VIP gaming business volume which fell 18% to SGD9.31b but with a better luck factor of 2.5% win percentage from 2.2%. Meanwhile, RWS lost its market leader status to MBS for the first time in six quarters as its market share for rolling chip volume fell to 48% in 1Q15 from 54% in 4Q14. Nonetheless, in MYR term, adjusted EBITDA rose 21% to RM612.6m while revenue rose 3% to RM1.70b.

Genting Malaysia Bhd (GENM, MP; TP: RM4.52) reported 1Q15 core profit, which fell 14% QoQ partly due to higher effective tax rate of 25% vs. 20% in 4Q14 while the turnaround in North America operations was offset by the earnings decline in Malaysian and UK operations. Losses at RWB was reduced to RM17.8m at EBITDA level on higher business volume while RWNYC was helped by higher revenue and lower payroll cost.

Genting Plantations Bhd (GENP, UP; TP: RM9.89) saw its 1Q15 core earnings fell sharply by 56% on weaker FFB production, which dropped 25% to 353k mt on seasonal weakness. This is despite a higher CPO selling price which rose 3% to RM2,246/mt from RM2,176/mt while average palm kernel price gained 27% to RM1,751/mt from RM1,378/mt previously.

Meanwhile, the Oil & Gas division posted lower earnings with adjusted EBITDA declining 32% to RM45.4m on the back of 28% drop in revenue to RM67.1m, mainly led by the lower average oil price in the quarter.

The losses for the Power division was reduced to RM0.2m from RM13.4m in 4Q14 while revenue contracted by 23% to RM172.4m from RM225.1m due to lower generation by the Jangi Wind Farm and a lower construction revenue recognised from the Banten Plant in Indonesia.

Source: Kenanga Research - 29 May 2015