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Thursday, February 25, 2016

Maybank IB Research maintains Buy on Genting Bhd

KUALA LUMPUR: Genting Bhd remains a Buy for Maybank IB Research as its latest financial results were in line with expectations, and it declared a higher-than-expected dividend.

Genting’s fourth quarter 2015 results were in-line with core net profit of RM455.3mil, bringing 2015 core net profit to RM1.52bil which was within Maybank’s expectations at 107% of its full year estimates.

Full-year EBITDA of RM5.69bil was also within expectations. Genting declared a dividend per share of 3.5sen that was above Maybank’s expectations at 113% of its full year estimate.

But, dividend yields are still negligible at less than 50bps per annum.

The 2015 year was marred by low VIP hold rates and bad debts at GENS and GENUK coupled with lower-than-expected FFB output and higher-than-expected production cost at GENP.

The research house said in a note on Wednesday that it is hopeful that all the aforementioned will turn around for the better in 2016.

GENM expects Resorts World Bimini (RWB) to break-even in mid-2016 due to the discontinuation of Bimini Superfast and 100 additional hotel rooms.

Maybank was however taken aback by the larger Genting Integrated Tourism Plan (GITP) budget, which was doubled from RM5bil to RM10.4bil.

It maintains a Buy call on Genting as there is more upside in the potential listing of 21%-owned TauRX. However it trimmed Genting’s target price by 2% tp RM8.90. It also cut its 2016/2017 earnings estimates by 3%/4% on higher depreciation.

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