Genting Bhd, the Malaysian conglomerate that controls the country’s only casino operator, as well as Genting Singapore and properties in the U.S., Bahamas and the U.K., offers a good value entry point to Association of Southeast Asian Nation gaming markets, CLSA notes.
The firm says Genting’s revalued net asset value is at a 24 percent discount to its listed subsidiaries. “Discount normalization should provide an immediate 8 percent share price uplift, while additional upside could come from growth prospects at all of its three core subsidiaries,” analyst Jian Bo Gan wrote in a note.
CLSA is reinitiating coverage on the stock with an outperform rating and a RM10.80 price target. It says it expects EBITDA to grow 15 to 18 percent in 2017/18 after falling 4 percent per annum since 2011.
Genting Malaysia saw its net profit increase four-fold to RM1.7 billion ($382.8 million) in the fourth quarter ended Dec. 31, 2016, compared to RM 338.6 million in 15Q4.
Revenue for the quarter was RM2.3 billion, down 0.4 percent year-on-year.
The jump in profit was attributed to a one-off gain of RM1.3 billion from the sale of its 16.8 percent stake in Genting Hong Kong and better operational performance, but the company also said it had seen stronger visitation to its Resorts World Genting property, which is undergoing a significant revamp.
Genting Singapore, the operator of Resorts World Sentosa, swung to a net profit of S$159.98 million (US$113.2 million) for the fourth quarter ended Dec. 31, 2016, compared to a net loss of S$7.8 million in the prior year period. Revenue was S$557.7 million, up two percent year-on-year compared to 15Q4.
Genting said the results were boosted by higher gaming revenue as a result of higher rolling win percentage in the premium player business, and a revised strategy to focus on better margin business.
Genting Bhd also has interests ranging from property to plantations.