Analysts mixed on Genting Malaysia’s acquisition of Equanimity for US$126m

KUALA LUMPUR: Analysts are mixed over Genting Malaysia Bhd’s acquisition of superyacht Equanimity despite the company’s ability to finance it with its large cash pool of about RM8 billion.

Public Investment Bank Bhd (PublicInvest) said Genting Malaysia might have justified the acquisition as creating a unique and competitive edge in servicing its premium customers but the benefits were limited when compared with the additional cost of owning a superyacht.

It estimated the acquisition to lead to up to a seven per cent decline in Genting Malaysia’s net profit for the financial years ending December 31, 2019 and December 31, 2020.

This was due to the potential impact of loss of interest income, additional depreciation cost and maintenance cost for the superyacht, it said in a report.

Genting Malaysia announced on Wednesday it bought Equanimity for US$126 million (RM514 million) and that the transaction would be completed by end of this month.

PublicInvest maintains an “underperform” on Genting Malaysia with an unchanged target price of RM2.70.

Kenanga Research said the acquisition would allow Genting Malaysia to differentiate itself from competitors by offering something unique to its premium customers.

It maintained the target price for Genting Malaysia at RM3.60 per share, implying price earnings ratio of 12.7 times.

RHB Research Institute Sdn Bhd said the acquisition of Equanimity complemented Genting Malaysia’s gaming and leisure businesses.

The superyacht could improve branding and VIP gaming volume, it said.

RHB Research reiterated its “buy” call for Genting Malaysia with a target price of RM3.90, from RM3.98 previously.