Genting expected to enjoy ongoing re-rating in 2017

KUALA LUMPUR: Genting Bhd (Genting) is expected to enjoy ongoing re-rating in 2017, supported by progressive launches of key developments in Genting Integrated Tourism Plan (GITP) and expected earnings recovery in Genting Singapore, AllianceDBS Research Sdn Bhd (AllianceDBS Research) observed.

It said, Genting Malaysia has gaming operations spanning Malaysia, the UK and US, with Malaysian operations as its key income contributor.

The research house noted that in 2016, the group’s Malaysian operations accounted for about 80 per cent of Genting Malaysia’s earnings before interest, tax, depreciation and amortisation (EBITDA).

AllianceDBS Research expected contributions from the group’s domestic operations to remain high going forward with the launch of GITP.

“The group has progressively launched Sky Avenue and Sky Plaza shopping malls since end-2016,” the research house said.

“Genting Malaysia launched the first and second floors of Sky Casino on March 30, which cater to the mass market.”

It added that the group is planning to open the third and fourth floors of Sky Casino, which are for VIP and gold card members in the third quarter of financial year 2017 (3QFY17).

AllianceDBS Research estimated that the first and second floors would add about 100 (net) gaming tables, which was within its expectations.

“Besides that, Genting Highlands Premium Outlet was soft launched in mid-June,” it said.

The research house has nonetheless noted that the outdoor theme park could be delayed to 2Q of 2018 (2Q18), versus previous target of end-2017.”

As for Genting Singapore, which operates Resorts World Singapore, AllianceDBS Research believed now is the opportune time to buy into the group.

Sunway’s acquisition of a prime land in Jalan Belfield has been viewed positively by analysts as the land is expected to generate better sales for the group for FY18.