Genting Bhd (BUY)

Expansion Mode On

• GenT confirmed that the 9.88% stake in EEG will only remain as investment portfolio.
• Potential new market for GenS most likely within the Asean region (Japan, Korea, Taiwan and/or India). We opined that Korea will be the most favorable one among the four.
• Expansion in USS is on track to be completed by end-2012. Impact on the potential tightening of Singapore’s Casino Control Act would not be significant given majority of visitorships into the casino are non-Singaporeans.
• The Group plans to continue expanding its power division and investing in its O&G arm but will the latter sell it off should there be any potential buyer.
• Earnings forecasts cut by 7-8% for FY12-14 following the downgrade of consensus earnings in Genting Singapore (GenS), partially offset by HLIB’s upgrade in Genting Plantations (GenP).
• Maintain BUY with lower TP of RM10.89. Genting is preferred over GenM. Share price may be weak for now but we believe the counter is worth holding for long-term investment. Hence, we advise investors to take this opportunity to buy on weakness. Moreover, with most negatives in the price and low expectations, there are potential for surprises.

Source: Hong Leong Investment Bank Research - 6 August 2012