Affirm BUY on Genting Bhd with an unchanged RNAVbased fair value
of RM11.85/share. Genting’s core net profit was within our expectations. If
consensus estimates had included exceptional items, then Genting Bhd’s results
would have also been in line with market expectations.
Genting Bhd’s revenue expanded by 29% YoY to RM19.6bil in
FY11 underpinned by strong contributions from the UK and Singapore.
The group’s EBITDA climbed 14% YoY to RM8bil in FY11 as
earnings from Genting Singapore PLC rose 19% and profits from the UK improved
by 74%.
These two casino divisions more than compensated for a loss
of RM66.9mil in the oil and gas division in FY11.
Although there is no revenue from the oil and gas division, the
division incurred a loss due to general and administrative expenses.
We understand that Genting Bhd would be implementing a development
plan for the Kasuri Block. Capex for the oil and gas division is expected to be
RM247mil in FY12F.
Recall that the Kasuri PSC (production sharing contract) is the
only oil and gas asset left in Genting Bhd after the group sold two PSCs in
Indonesia to AWE Ltd for RM121mil early this year.
EBITDA of the power division rose 16% YoY to RM632mil, underpinned
by higher volume of production and tariff hike in China.
We understand that Genting Bhd is still negotiating with Tenaga
Nasional Bhd for a power purchase agreement for its Genting Sanyen power plant,
which is due to expire in FY15F.
Genting Bhd has only declared a final gross DPS of 4.5 sen less
25% tax. This brings total gross DPS to 8 sen less 25% tax for FY11. The gross
DPS of 8 sen for FY11 (FY10: 7.8 sen) translates into a yield of only 0.8%.
We gather that FY11 dividend payments were meagre as the
group is conserving cash for its expansive capex plan. Genting Group’s capex is
estimated at RM4.5bil for FY12F.
Source: AmeSecurities
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