Maintain BUY on Genting Malaysia Bhd (GenM), with an unchanged
RNAV-based fair value of RM4.30/share. GenM’s results were within consensus
estimates and our expectations.
We have tweaked GenM’s FY12F to FY13F earnings forecasts for
housekeeping reasons and to account for lower daily wins per machine at
“Resorts World New York”(RWNY).
Our new assumption is a daily win of US$330/machine for FY12F
versus US$400/machine previously. Year-to-date, average daily win was
US$347/machine.
GenM recorded a maiden contribution from RWNY in FY11. Excluding
cost overruns, which contributed to a loss of RM17.3mil in 4QFY11,
operationally RWNY recorded revenue of RM95.3mil and EBITDA of RM23.6mil from
two months of operations in FY11. This implies an EBITDA margin of 24.8%.
We understand that RWNY has stepped up its marketing efforts
in New York and has implemented a bus programme running to, and from, Queens
and Manhattan.
We also gather that there are seasonality trends to the average
daily wins/machine. The average daily wins/machine tends to decline during
winter and pick up during summer.
As for the legalisation of a full-fledged casino licence in New
York, we understand that the legislative process would take 2½ to three years.
In Miami, the next seating for the approval of the casino bill would be in
FY13F.
Revenue of GenM’s casino operations in Malaysia rose 7% YoY
to RM5.4bil in FY11, underpinned by improvements in win percentage. If luck
factor were to normalise, then revenue would have risen by only 4% YoY in FY11.
Non-VIP players drove the increase in the volume of business.
Volume of business from the non-VIP segment rose by a low double-digit
percentage YoY in FY11. This helped compensate for a single-digit percentage
decline in the volume of business from the VIP players.
In the UK, volume of business at the London casinos climbed
22% YoY in FY11. Volume of business at the provincial casinos was flat YoY in
FY11.
Source: AmeSecurities
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