2013 results were a tad below expectations due to start-up losses at the Bahamas.

We leave our estimates relatively unchanged for now.

Maintain BUY with a slightly lower TP of MYR4.74 (-1%).

What’s New

4Q13 core net profit of MYR406m (-3% YoY, +2% QoQ) brought FY13 core net profit to MYR1.7b (+7% YoY), meeting 94% of our full year estimate, slightly below our expectations. The shortfall was due to FY13 start-up LBITDA at the Bahamas (Resorts World Bimini and Bimini Superfast) of MYR119m.

Visitor arrivals to Resorts World Genting (RWG) were down (4Q13: - 14% YoY, -4% YoY) ostensibly due to the closure of the Outdoor Theme Park on 1 Sep 2013but we note that its revenue and EBITDA were not materially impacted. This reflects marked growth in average gaming spend per casino patron.

What’s Our View

While the LBITDA at the Bahamas was not welcome, we leave our estimates relatively unchanged for now. Although we expect 2014 group EPS to ease 6% YoY, this is due more to the normalisation of corporate tax rates. More representatively, we gather that 2014 EBITDA will grow 14% YoY due to non-recurrence of certain one-off items (donations and backdated salary increments at RWG). We maintain our BUY call with a slightly lower DCF based TP of MYR4.74. Investors should not lose sight that its MYR3b RWG expansion may come on-stream as soon as late next year and raise its room count by 1,300 (+>13%). Another casino bill was also submitted to the Florida (USA) senate on Monday, possibly paving the way for GENM to resume its venture there.  

Source: Maybank Research - 28 Feb 2014