Affin Hwang maintains Buy on Genting, TP at RM9

KUALA LUMPUR: Affin Hwang Capital research maintained its buy call on Genting Group with an unchanged target price of RM9 following the release of results for Genting Singapore in 1H19.

The research house said the Singapore business posted a core PATAMI of S$373.8mil, which was 7.3% lower year-on-year and broadly in line with its and consensus expectations.

The company’s revenue grew 14% y-o-y in 2Q but core PATAMI only rose 2% due to the higher impairments on its receivable and accelerated depreciation on some of its assets.

“Given the exceptional high win rate during the quarter at 3.7% vs 2.1% in 2Q18, management has decided to be more prudent on their receivables and raised the impairment by S$47m during the quarter.

“Despite the increase in overall impairments, there was not any significant increase in any write-off related to it,” said Affin Hwang.

It added that it expects Genting Singapore management to tighten its credit policy in the event of intensifying trade tensions.

Genting Singapore’s management has guided that the underlying mass market business experienced a significant drop in volume during the quarter owing to a 50% hike in entry levy and a slowing local economy.

“We concur with management’s view that local punters will likely get use to the new levy, however the overall mass gaming volume is still likely to remain weak due to the challenging economic outlook both locally and regionally.

“We believe that the opening and expansion of some regional casinos will steal some of GENS’ both premium mass and VIPs,” said the research house.

Source: TheStar