News It was
announced on TauRx’s website that Genting Management (Singapore) Pte Ltd (GMS),
a wholly-owned subsidiary of GENTING, had invested USD31.5m in TauRx
Pharmaceuticals Ltd.
This is the first
tranche of a total investment of USD111.8m by GMS in TauRx in exchange for a 20%
equity stake. The remaining USD80.3m investment is expected before the
year-end.
TauRx has also
announced the appointment of GENTING’s Chairman & CEO, Tan Sri Lim Kok Thay
and President & COO, Mr Tan Kong Han as the Board of Directors of the
pharmaceutical firm.
Comments This
non-gaming venture came as a surprise to us as the company’s intention is to be
mainly focused on growing its casino business.
The size of the
investment is insignificant against the group’s equity fund of RM19.2b. As
such, we are neutral on this venture as it is not synergistic to the group’s
current businesses.
Note that GENTING
itself has yet to make any official announcement on this matter.
TauRx was established
in Singapore in 2002 with its primary research facilities located in Aberdeen, Scotland.
It is a clinical stage pharmaceutical company focusing on the discovery of
therapies and diagnostics for neurodegenerative diseases of the central nervous
system.
In particular, the
company is developing Tau Aggregation Inhibitors to slow or halt the progression
of Alzheimer’s and related diseases.
Outlook We are
unable to quantify the earnings impact from this venture to the group at this
juncture, although we believe that it should be immaterial.
Forecast No
changes to our estimates.
Rating Maintain OUTPERFORM
Valuation We
are keeping our TP on GENTING unchanged at RM10.09/share based on a 20%
discount to its SOP while awaiting its results to be released later this
month.
Risks Risks
to our call are 1) poorer luck factor and 2) a substantial decline in CPO
prices.
Source: Kenanga
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