CIMB cuts Genting rating after poor Q3 results

Monday 24th of November 2014

CIMB Equities Research has cut its rating on Genting Bhd after weak Q3 results at its main operating units -- Genting Singapore, Genting Malaysia and Genting Plantations.

“We downgrade our rating from Add to Hold” as continued operational headwinds faced by GENS and concerns about the competitive landscape at the Las Vegas strip will continue to weigh on investor sentiment.”

The firm also cut its share price target to RM9.90 ($2.95) based on a 20 percent holding company discount to net asset value.

Genting on Friday posted a 12 percent drop in profit before tax from continuing operations of RM954.0 million.

The year ago figure had included a net fair value gain on derivative financial instruments and a gain on the disposal of available-for-sale financial assets.

Group revenue from continuing operations was RM13,594.5 million compared with RM12,707.3 million generated in the first nine months of 2013, an increase of 7 percent.

“The Asian gaming and tourism industry is experiencing significant challenges in the face of economic slowdown in the major visitor markets and other environmental factors,” Genting said.

Genting said Resorts World Sentosa’s Q3 weakness was attributed mainly to the premium players business which underperformed due to a low win percentage.

Resorts World Genting in Malaysia recorded lower revenue mainly due to a lower hold percentage in the premium players business, mitigated by an overall higher volume of business.

The lower EBITDA was mainly due to lower revenue and higher costs relating to premium players business.

In Malaysia, Genting said the renovation work at its Resorts World Genting property is progressing well and The Arena of Stars, which was closed earlier this year for upgrading and maintenance works, has recently re-opened. The 1,300 rooms under the Tower 2 annex development is on track to open by mid 2015.