Genting’s share price hit by Covid-19, FY20 estimates cut again
KUALA LUMPUR: Genting Bhd’s (Genting) share price selldown was deemed ‘overly pessimistic’ by the research arm of Kenanga Investment Bank Bhd (Kenanga Research).
To note, Genting’s share price plunged 41 per cent year to date (YTD) to near three standard deviation (SD) below its fiveyear price to book value (PBV) mean as the Covid-19 spread to become a pandemic globally that is restricting business activities.
“So far, the group’s Leisure and Hospitality operations are mostly temporarily closed except Genting Singapore’s Resorts World Sentosa and Genting Malaysia’s Crockfords Cairo in Egypt,” Kenanga Research said.
“Having said that, we believe the sell-down to -3SD level is overly pessimistic and also too excessive. At one point, it closed at RM1.92 last week, down 51 per cent YTD or at 11-year low since the 2009 financial crisis.”
Following the research arm’s previous 27 per cent cut in financial year 2020 estimate (FY20E) earnings in end-February to adjust for Genting Malaysia and Genting Singapore’s earnings on the Covid-19 outbreak, Kenanga Research cut FY20 earnings estimate for Genting further by 13 per cent on the back of the four-week Movement Control Order (MCO) in Malaysia.
The earnings estimate was also cut further due to the closure of other non-Malaysia Genting Malaysia casinos in the UK, US and Bahamas coupled with revised Genting Plantations’s estimates on lower crude palm oil (CPO) price by six per cent to RM2,550 per metric tonne (MT).
The research arm also reduced FY21 earnings forecast by seven per cent for the adjustment in Genting Malaysia earnings as well as a lower CPO price-driven Genting Plantations forecast.
As such, Genting’s core net profit for 2020E and 2021E now amounted to RM1.765 billion and RM2.212 billion, respectively.
“For now, we keep our Genting Singapore projections unchanged as we have already cut forecast at end-February and Resort World Sentosa is still open during this period.”