1H15 core earnings of MYR898.4m came in within expectations as weakness in its gaming segment was offset by improvements in its non-gaming operations. Maintain NEUTRAL with our TP revised to MYR7.19 (from MYR9.30, 8% upside), factoring in our latest valuation on its listed subsidiaries and pegging a higher discount of 30% (from 10%) to reflect its high foreign shareholding level of over 47%.

Results review. 1H15 revenue shed 6.2% YoY to MYR8.54bn, dragged by subpar showing of its Resorts World Sentosa and plantation division, which saw poor production due to the dry weather in Sabah. EBITDA,meanwhile, sank 23% YoY to MYR2.60bn with overall margin closing 650bps lower at 30.5%, exacerbated by subpar VIP hold rates in bothMalaysia and Singapore gaming operations, while its UK casinos swung into the red due to higher bad debt provision. All in, core earnings of MYR898.4m came in within expectations at 47.2%/46.8% of our/consensus full-year estimates, as weakness in its gaming segment was offset by improvements in its non-gaming operations. 2Q15 core earnings of MYR550.1m (after stripping out exceptional losses amounting to MYR396.5m predominantly on fair value loss on derivative financial instruments) were higher QoQ and YoY owing to higher interest income and lower taxation expenses incurred.

Briefing highlights. On its proposed Resorts World Las Vegas, management indicated that the development plan is currently being finalised with its capital outlay to be determined by end-2015. Construction could start as soon as mid-2016 with the first phase of the integrated resort scheduled to open by mid -2018.

Forecasts and risks. We reduce our FY15-17F EPS by 0.5-3.5% following our earnings revisions on its listed subsidiaries and as we upgrade contribution from its power and oil and gas divisions in view of the better-than-expected showing in 1H15. Key risks include fluctuations in luck factor and potential weakness in CPO prices.

Maintain NEUTRAL. All in, we are maintaining our NEUTRAL call with our SOP-based TP revised to MYR7.19 (from MYR9.30), factoring in our latest valuation on its listed subsidiaries and pegging a higher discount of 30% (from 10%) to reflect its high foreign shareholding level of over 47%as of Jun 2015 amidst current cautious market sentiment.