The group’s full-year FY11 results were in line with our
estimates but marginally beat consensus numbers by 8%. Despite the recent
setback in Miami and depletion of the group’s net cash balance to just RM343m
as at Dec 2011, its free cash flow remains robust at RM1.2bn p.a, underpinning
its capacity for future acquisitions. The maiden full-year contribution from
RWNY to earnings in FY12 is expected to drive group earnings by 19.6%. Maintain
BUY, and at a fair value of RM4.32, backed by its
alluring 8.1x EV/EBITDA.
In line.
Adjusting for various exceptional items, the group’s FY11 core earnings were in
line with our estimates, with its full-year core FY11 earnings representing
102.1% of our full-year forecast but a larger 108% of consensus. EBITDA and net
profit expanded 15.1% and 11.2% respectively on better hold rates at its
domestic VIP gaming business and maiden
contribution from its UK business. On a q-o-q comparison, EBITDA contracted
1.9% q-o-q, largely owing to a RM40.9m construction loss from cost overruns from
the development of Resort World at New York (RWNY) which it incurred in 4Q11. Excluding
the construction loss, the group’s core operations reported a 5.7% q-o-q increase
in EBITDA, driven by the higher business volume from Malaysia and a maiden RM23.6m
contribution from RWNY, which commenced operation on 28 Oct 2011. Meanwhile,
casino visitation in UK stood at +5% in London and +9% at
provincial casinos.
Malaysian casino op
resilient. Its Malaysian casino operation, which comprises
the bulk of group earnings (at 90%), reported 7% y-o-y and +6% y-o-y
growth in revenue and earnings respectively,
although 4Q11 revenue contracted
1% q-o-q on the back of a lower win
percentage. Foreign visitor growth was driven by Singapore and Indonesia, from
which visitation was higher by 6% and 8% respectively for the FY11 period
despite fierce competition from the operation ramp-up by Singapore’s integrated
resorts. More importantly, hotel arrivals from Singapore were higher than the
pre-Singapore IR levels as Genting Highlands’ lower price points and cool
mountain air continue to be a key draw for mass market visitation.
Source: OSK188
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