Genting Malaysia

Re: Genting Malaysia

Postby winston » Wed Oct 17, 2018 8:58 am

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Genting Malaysia (GENM MK)

by Samuel Yin Shao Yang

Share Price: MYR4.38
Target Price: MYR5.70
Recommendation: Buy

Once in a decade opportunity to BUY

Despite GITP Phase 1 approaching construction completion and potentially decent 3Q18 results, GENM’s share price fell 11% since 9 Oct 2018 (-21% YTD) due to fears of a tax hike.

While this risk cannot be discounted, we gather that the market is imputing an overly onerous tax hike of 8-10ppts.

GENM is even trading at 1.2x 12M forward P/BV, a multiple not seen since the Global Financial Crisis a decade ago. Risk-reward profile overwhelmingly favours reward, in our view.

Value Proposition

Owns and operates Resorts World Genting (RWG), Genting UK (GENUK), Resorts World New York (RWNY) and Resorts World Bimini (RWB).

RWG is ~80% of group earnings and resilient. RWG is expanding via the Genting Integrated Tourism Plan (GITP).

GITP involves 1,536 hotel rooms, 20th Century Fox World, indoor theme park, mall, plaza and new cable car line.

ROEs fell to <10% after 2013, dragged by start-up losses at RWB. Rationalising RWB operations to improve ROEs.

ROE<WACC but should inch higher due to the GITP and rationalised RWB operations.


Source: Kim Eng

https://factsetpdf.maybank-ke.com/PDF/1 ... b86e53.pdf
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Re: Genting Malaysia

Postby winston » Sun Oct 28, 2018 8:20 am

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Eye On Stock: Genting Malaysia

GENTING Malaysia Bhd (code: 4715) is moving in consolidation mode after a sharp correction from Oct 10 to 15 that saw its share price lose 13% of its value.

The stock had touched bottom at RM4.29 before it pushed back from oversold conditions to retrace some of the losses.

However, the rebound only took the counter about halfway back before it hit a resistance of RM4.59.

Failing to move past this hurdle, there is growing negative pressure on the share price as the key simple moving averages (SMA) continue to fall.

The daily price chart shows that Genting Malaysia remains in a bearish formation, trading well below the key SMAs.

The slow-stochastic momentum index is resting at 21 points with the percent K oscillator approaching the percent D oscillator to indicate a return to bullishness.

The daily moving average convergence/divergence line has also arched up towards the signal line, indicating the possible return to an uptrend.

The 14-day relative strength index is hovering at 35 points but has slipped to a negative trajectory. Should the stock swing once more to the upside, the share price can be expected to reach towards the immediate obstacle of RM4.59.

Nevertheless, the indicators only suggest budding strength, with little evidence that momentum will follow-through to a positive breach of the resistance.

It would take some positive catalyst to bolster the buying interest before a crossing can be confirmed. Looking overhead, the next target would rest at RM4.66, the upper limit of the downside gap left behind on Oct 10.

In the event of negative news or profit-taking, the stock could slip into the next lower trading range between RM4.29 and the current immediate support of RM4.38.

Source: The Star

https://www.thestar.com.my/business/bus ... 2k1FjvC.99
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Re: Genting Malaysia

Postby winston » Mon Nov 05, 2018 10:27 am

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Higher gaming duties hit Genting group

by Wong Ee Lin

KUALA LUMPUR: The hilltop in Genting Highlands is probably a big loser of Budget 2019, in which the Genting group did not seem to be dealt with a good hand of cards.

Genting Malaysia Bhd (Genting Malaysia), which owns the hilltop, lost a market capitalisation of RM1.24 billion in just a few minutes shortly before the closing bell rang at the local stock exchange, while some RM2.23 billion was wiped off from its parent company’s, Genting Bhd (Genting), market cap.

The selldown is expected to continue when the market resumes trading today, no thanks to the government’s decision to tax more. Being the only legitimate in the country, Genting Malaysia is the clear target for the duty hike. Both Genting Malaysia and Genting are component stocks of FBM KLCI, the selling is expected to weigh on the benchmark index.

Year to date, Genting Malaysia shares have fallen about 19.43% to close at RM4.54 last Friday with a market cap of RM25.67 billion, while Genting shares have slid about 24.58% to close at RM7.20 last Friday, bringing it a market cap of RM27.72 billion.

To fill the nation’s coffers, the government has raised duties to 35% from 25% on gross gaming income and gaming machine duties to 30% from 20% on gross collection.

On top of that, the ministry of finance, which issues the licence, has increased the annual licence fees by RM30 million to RM150 million, and machine dealer’s licence to RM50,000 from RM10,000 a year.

It is believed that this is the first hike on duties in 20 years. The previous increment, from 22% to 25% currently, was in 1998 when the government needed the extra revenue boost for pump priming measures during the 1997/98 Asian Financial Crisis.

Raising the gaming duties was not a surprise considering it was known that the government wanted to raise tax revenue, but a quantum jump of 10% made some jaws drop. Furthermore, this comes at a time after Genting Malaysia invested big in expanding and upgrading its facilities, for example the Fox World Theme Park.

To put things in perspective, revenue reported on Genting Malaysia’s income statement is net of gaming duties.

For the six months ended June 30, Genting Malaysia’s revenue generated from Malaysian operations was at RM3.196 billion, which was net of gaming duties of 25%. Its gross revenue would have been RM4.261 billion for the period.

Hypothetically, the group’s revenue would have been RM2.769 billion under the new tax rate of 35%, shrinking by RM426.45 million.

Investment analysts who track the Genting group have slashed their earnings forecasts, especially for Genting Malaysia, which derives a large bulk of its earnings from the hilltop although it owns operations abroad, for instance in the UK.

The fall in net profit is estimated to be as much as 30% in the next financial year ending Dec 31, 2019 (FY19) and 27% in FY20.

Nomura head of Malaysia equity research Tushar Mohata said the increases in gaming taxes and licence fees are extremely “punitive”, and are diminishing the investment appeal of the gaming sector.

Tushar, in a research note on Budget 2019, estimated a RM600 million to RM700 million impact to be trimmed from Genting’s net income for FY19 to FY20, which would offset a big chunk of the earnings growth expected from its substantial capital expenditure into new capacity over the past five years.

“While a gaming tax increase had been an ongoing risk and the stock corrected in October, we believe the market had factored in only a 5% tax increase, and further downside exists when trading begins on Monday,” said Tushar.

Downgrading Genting Malaysia’s rating call to “reduce” with a lower target price of RM4.20, he has also cut FY19/FY20 earnings before interest, taxes, depreciation and amortisation forecasts by about 20% each and net income estimates by about 30% each to take into account of the duty hike.

“In the immediate term, we believe Malaysia gaming sector will suffer the fate of other sectors such as telecoms, construction and property, which have faced regulatory reboots, and remain weak,” said Tushar.

That said, even after the tax increase, Tushar believes that Genting Malaysia will remain a cash-generating machine. He estimates an operating cash flow generation of RM2.5 billion each in FY19/FY20, even with higher duties.

Easy target for tax revenue?

Meanwhile, a local analyst that declined to be named said the sharp rise in gaming duties might make Genting Highlands less competitive in terms of attracting the crowd.

The analyst noted that Malaysia, in terms of gaming tax structure, is currently one of the highest across Asia and a gaming duty hike would not help, especially when there are newer ones elsewhere, such as in Vietnam and Cambodia.

“This increase could potentially open the tap in the sense that should there be any shortfall in government budget in the future, there would still be fears that the government could increase the gaming tax again and this could create uncertainties in every budget every year,” said the analyst.

Nonetheless, the impact on the profitability still depends on the business conditions or the overall spending environment at that time, said the analyst, adding that revenue has been growing since two years ago when the Genting Integrated Tourism Plan was embarked.

“This would not have a direct impact on punters, but Genting will be getting less from the spending [of these punters],” said the analyst.

Source: The Edge

http://www.theedgemarkets.com/article/h ... ting-group
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Re: Genting Malaysia

Postby winston » Mon Nov 05, 2018 3:34 pm

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Genting Malaysia downgraded to hold at Maybank; price target RM4.40

KUALA LUMPUR (Nov 5): Maybank Kim Eng analyst Shao Yang Yin downgraded the recommendation on Genting Malaysia Bhd to hold from buy.

* Price target (PT) lowered to RM4.40 from RM5.70, implies 3.1% decrease from last close. Genting Malaysia average PT is RM5.91.

* Genting Malaysia had 18 buys, 3 holds, 0 sells previously: Bloomberg data

* Analysts lowered their consensus one-year target price for the stock by 2.5 percent in the past three months. Forecasts range from RM4.40 to RM8.

Performance Metrics

* Investors who followed Yin's recommendation would have received a negative 11 percent return in the past year, compared with the negative 5.4 percent return on the shares.

Source: The Edge

http://www.theedgemarkets.com/article/g ... rget-rm440
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Re: Genting Malaysia

Postby winston » Fri Nov 09, 2018 9:16 am

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Higher gaming tax credit negative for Genting, says Moody's

KUALA LUMPUR: Moody's Investor's Service views the higher axes, fees and levies on the gaming industry as credit negative for the gaming industry.

“The changes, in particular the increase in duties of up to 35%, is credit negative for Genting Bhd (Baa1 stable) because earnings contribution from its Malaysia leisure and hospitality segment will fall and consequently weaken the group's leverage,” it says.

Genting currently pays duties of up to 25% on gaming revenue but under the Budget 2019, it will have to pay the higher duty.

Moody's said the Budget 2019 that will impact Genting include:
(1) license fee will increase to RM150mil per year from RM120mil;
(2) duties will increase up to 35%; and
(3) machine dealer's license will increase to RM50,000 per annum from RM10,000.

The rating agency expects Genting's earnings before interest, interest, tax and depreciation (Ebitda) to decline by around RM650mil in 2019 under a stressed scenario, where duties of additional 10% on gaming revenue starts from Jan 1, 2019.

The decline will erode the likely initial gains the group will achieve in 2019 following the completion of its Genting Integrated Tourism Plan (GITP) at Resorts World Genting.

GITP, which started in 2013, is a development that will enhance Resorts World Genting with
(1) additional food and beverage offerings, and entertainment and retail areas;
(2) a new indoor theme park; and
(3) rebuilding of the outdoor theme park as a 20th Century Fox World theme park.

“Consequently, we expect Genting's credit metrics to weaken, but remain within its Baa1 rating parameters. Leverage, as measured by debt/EBITDA will likely increase to 3.8 times in 2019, from 3.5 times in 2018 . Retained cash flow (RCF)/debt will likely weaken to 12% from 13% over the same period,” it said.

Although Genting's credit metrics are expected to remain within their rating parameters of Baa1, there is limited headroom to accommodate an increase in debt until construction of Resorts World Las Vegas (RWLV) completes and the new integrated resort starts contributing to the group's earnings.

Ground breaking of RWLV took place in May 2015 and its first phase of development is currently underway with the completion targeted for 2020.

Source: The Star

https://www.thestar.com.my/business/bus ... au3VpV1.99
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Re: Genting Malaysia

Postby winston » Mon Nov 19, 2018 9:19 am

Gaming – Malaysia

Duty Hike Is Not As High As Expected; Time to Double Down

We upgrade our 2019-20 EBITDA for GENM by 18-19% after assuming that the VIP gaming duty is raised only by 10ppt to 20% of GGR, well below the initially expected 35%.

Accordingly, we upgrade GENM to BUY, and the gaming sector to OVERWEIGHT.

Companies’ share prices have bottomed out, having factored in the worst of gaming duty hikes, and investors will refocus on event catalysts from now till 1Q19.

Top picks are GENT and Magnum.

https://research.uobkayhian.com/content ... 9f9750ce6d
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Re: Genting Malaysia

Postby winston » Sat Nov 24, 2018 8:29 am

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Gaming sector upgraded due to lower duty than expected

21 Nov 2018

“Given that the negative impact from the gaming tax hike has been fairly priced in, and with the lower-than-initially expected VIP gaming tax serving as a pleasant surprise, investors may now refocus on Genting Group’s catalysts in 2019,” UOBKayHian said.

PETALING JAYA: The gaming sector has been upgraded to an Overweight from Market Weight previously, as UOB KayHian Research expects duty for the VIP segment to be raised to 20% of gross gaming revenue, lower than the initially expected 35%.

In a report, the research house said its channel checks firmly suggested the duty for the VIP segment would be raised by 10 percentage point to 20% from January 2019 onwards.

This, it said, was consistent with the Genting Group’s earlier announcement, which inferred that its gaming duties would be subject to 10 percentage point hikes.

It noted that the announcement during Budget 2019 had only referred to a singular rate of 35%, sparking concerns among investors.

“Given that the negative impact from the gaming tax hike has been fairly priced in, and with the lower-than-initially expected VIP gaming tax serving as a pleasant surprise, investors may now refocus on Genting Group’s catalysts in 2019,” it said.

The research house said Genting Malaysia Bhd’s share price, from its current low base, could react positively to the soon-to-be-opened indoor theme park, which features over 20 rides and attractions, as well as the opening of the Fox Theme Park, slated for the first quarter of 2019.

“Both openings will significantly raise visitor arrivals to Genting Highlands with modest spillover into gaming volumes, particularly the mass market segment,” it said.

It also expects parent company Genting Bhd’s share price to trend up in the lead-up to Genting Singapore’s submission of its bid for the Japan integrated resorts concession, anticipated to take place in the second half of 2019.

The share prices of Genting Malaysia and Genting Bhd have dropped by 20% and 3% since the Budget 2019 speech, down 38% and 29% from their respective year-to-date peaks.

Genting Malaysia was upgraded to a Buy with a higher target price of RM4.30, while its 2019-2020 earnings before interest, tax, depreciation and amortisation (EBITDA) was raised by 18%-19%, on revised assumptions of a lower increase in the VIP gaming tax, as well as lower cost cuts.

“We continue to expect Genting Malaysia to conduct cost-cutting measures to mitigate the impact of the tax hike. “However, we have revised down our assumption of the annual 2019-2020 cost cut from RM200mil (about 3% ofthe total cost of the Malaysian operations) to RM100mil,” it said.

It noted that a 20% VIP gaming tax should not force Genting Malaysia to cut cost as severely as originally expected, and instead, induce the group to expand its non-gaming and non-core related ventures.

For the parent company, the research house has maintained its Buy call on the counter, with a higher target price of RM8.05, while the 2019-2020 EBITDA has been revised by 5%-6%.

“We still prefer Genting Bhd over Genting Malaysia, as it is cheaper and has indirect exposure via Genting Singapore on stable Singapore operations and greenfield integrated resorts opportunity in Japan,” it said.

However, it noted that there were impairment risks in the group’s investments in its non-core businesses, such as pharmaceutical company TauRx.

Source: The Star

https://www.thestar.com.my/business/bus ... i8M7koT.99
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Re: Genting Malaysia

Postby winston » Tue Nov 27, 2018 7:23 am

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Disney, Fox sued in U.S. for $1 billion over Malaysia theme park

by Jonathan Stempel

Source: Reuters

https://www.reuters.com/article/us-fox- ... sinessNews
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Re: Genting Malaysia

Postby winston » Wed Nov 28, 2018 8:33 am

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Genting Malaysia loses new theme park catalyst, shares tumble

by Intan Farhana Zainul

The RM4.5bil 20th Century Fox World theme park was supposed to have been completed by the end of last year, but the opening was pushed back to the middle of next year.

“Due to potential legal complications, we are concerned if Genting Malaysia could still open the theme park in the first-half of 2019,” CIMB Research said in a report yesterday.

AllianceDBS Research reckoned that Genting Malaysia may seek other global partners to license the characters for its theme park.

“There could also be additional costs incurred to redesign the outdoor theme park due to the termination of the collaboration,” it said.

The counter’s market capitalisation has been erased by RM8bil since early this month. On a year-to-date basis, Genting Malaysia has declined more than 46% to RM3.


Source: The Star

https://www.thestar.com.my/business/bus ... 3107mx9.99
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Re: Genting Malaysia

Postby winston » Wed Nov 28, 2018 9:24 am

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Genting suing Disney and 21st Century Fox

The Star daily newspaper has said that Genting Malaysia is suing Disney and 21st Century Fox for more than US$1bn.

This is a major negative surprise to us. The opening of the 21st Century Fox theme park has already been delayed for more than one year.

We maintain Hold pending the conference call this Friday for 3QFY18 results.

Source: CIMB

https://brokingrfs.cimb.com/zn59oXCPXhR ... nwpHg2.pdf
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