- Genting Bhd has proposed to dispose of its 73%-owned Genting Sanyen Power Plant in Malaysia to 1Malaysia Development Bhd (1MDB) for RM2.3bil cash.
- If the selling price of RM2.3bil were grossed up assuming Genting Sanyen Power Plant was 100%-owned by Mastika Lagenda, which holds the power plant, then the selling price would be RM3.2bil.
- Previously, it was reported that Genting Bhd would be selling its power plant in Malaysia for RM3.0bil to RM3.5bil to 1MDB.
- The grossed-up selling price of RM3.2bil would value the power plant at an FY11 PE of 19.2x and a multiple of 5.8x on its net assets. Mastika Lagenda recorded a net profit of RM164mil and net assets of RM547.4mil in FY11.
- As mentioned in our previous report, we reckon that the disposal of the power asset in Malaysia would allow Genting Bhd to be a purer casino company. In addition, it would also boost the group’s cash reserves. Furthermore, Genting Bhd would not be plagued by uncertainties in respect of Genting Sanyen’s Power Purchase Agreement, which is due to expire in February 2016.
- We reckon that there is potential for Genting Bhd to return part of the disposal proceeds back to shareholders in the form of higher dividends. Assuming half of the proceeds are paid as dividends, this would translate into 31 sen/share.
- Assuming 25% of the proceeds are returned back to shareholders, this would translate into 15 sen/share. In the Bursa Announcement, Genting Bhd said that the disposal proceeds would be placed in deposits with financial instruments.
- As at end-FY11, Genting Bhd had net cash of RM586.5mil at the company level. In June 2012, the group issued RM2bil 20-year medium-term notes.
- Genting Bhd would realise a gain of RM1.9bil from the disposal of the Genting Sanyen Power Plant and the land assets. Disposal of Genting Sanyen would be completed by 30 August 2012. We maintain a BUY on Genting Bhd for its indirect casino exposure to Malaysia, the US, Britain and Singapore. We reckon that the recent fall in Genting Bhd’s share price represents a good opportunity to buy.
Source: AmeSecurities
No comments:
Post a Comment