Genting’s share price likely to be impacted by Japan casino bids

KUCHING: Genting Bhd’s (Genting) share price is projected by Affin Hwang Investment Bank Bhd (AffinHwang Capital) to likely be impacted by both news on the Japan casino bids and the progress of the Genting Integrated Tourism Plan (GITP) at Genting Highlands.

According to AffinHwang Capital, news on the Japan casino bids will likely have the bigger impact on Genting, as the research firm believed the Japan gaming market could potentially be the second-largest gaming market in Asia behind Macau.

“This news flow will likely increase the volatility on the Genting Singapore PLC (Genting Singapore) and Genting Malaysia Bhd (Genting Malaysia) share prices, which in turn would influence the Genting holdingcompany discount,” it said in a company update.

In AffinHwang Capital’s view, there is no doubt that the Genting share price will also be impacted by the financial performance of its listed subsidiaries, as the group’s cash flow is dependent on the casino-management fee from Genting Malaysia and also the dividends paid from the three listed subsidiaries.

The research firm forecasted Genting Malaysia, Genting Singapore and Genting Plantations Bhd ( Genting Plantations) to post earnings per share (EPS) compound annual growth rates (CAGRs) of 10 to 55 per cent over 2016 to 2018E, after a relatively disappointing 2014 and 2015.

On a weaker- than- expected performance at Genting Singapore and Genting Malaysia, Affin Hwang lowered thus its 2016-17E earnings, but raised them in 2018E on an expected pick up.

In AffinHwang Capital’s view, the current holding-company discount towards the revalued net asset valuation (RNAV) at 28.5 per cent is too wide to be ignored, as it is currently at +1 standard deviation (SD) above Genting’s historical average.

The research firm attribute the spike in the discount to the increase in volatility in Genting Singapore’s share price.

“Assuming a narrowing of the discount back to the group’s past-six-year average of 16.2 per cent, this would offer close to 17 per cent upside from the current share price (half the upside to our target price),” the research firm said.

Affin Hwang upgraded Genting to ‘ buy’, from ‘ hold’ previously.