The group’s annualised 9MFY12 results were in line with both consensus and our expectations. Its core gaming operations in Malaysia reported double-digit growth for VIP gaming and mid single-digit growth for mass market gaming but a partial drag in win rates. The current share price offers an excellent opportunity to accumulate, as its valuation is undemanding at 12.3x PE. Its stable domestic mass market gaming revenue, amidst such global macroeconomic uncertainty, is a key attraction. Maintain BUY, with the FV unchanged at RM4.21.
In line. The group’s headline earnings were impacted by RM183.9m in impairments and RM48.2m in construction cost overruns for its casino in the US. Adjusting for the abovementioned exceptional items, Genting Malaysia’s annualised 9MFY12 core net profit met expectations, representing 74.8% and 74.7% of consensus and our full year forecast respectively. The impairments were related to a write-down of goodwill from the acquisition of the Omni Centre in Miami, Florida, certain casinos and provincial casinos’ assets in its UK operations and the carrying value of its casino concession agreement in Egypt.
Sequential results impacted by UK casinos. Given Genting Malaysia’s high base of its preceding earnings in 2Q12, earnings in 3Q12 declined by 25.4% q-o-q thanks to a drop in business volume, lower luck factor and some bad debt write-offs from its UK operations. This was largely expected as its UK casino operations have benefitted from exceptionally strong win rates in 2Q12 which resulted in it registering EBITDA growth of 278% q-o-q and 141% y-o-y.
Malaysian casino ops resilient. The group’s domestic gaming profit declined by a marginal 2% as a result of higher marketing costs. Revenue was up 2% despite lower win rates as relatively healthy domestic gaming volume growth was sufficient to offset the poorer win rates. The group’s Malaysian casino operation, comprising the bulk of group earnings at 83%, reported double-digit volume growth in VIP gaming and mid single-digit growth in mass market gaming. Meanwhile, overall visitor numbers rose 2% y-o-y as domestic day trippers continued to contribute the bulk of the total arrivals at a steady 74%.
In line. The group’s headline earnings were impacted by RM183.9m in impairments and RM48.2m in construction cost overruns for its casino in the US. Adjusting for the abovementioned exceptional items, Genting Malaysia’s annualised 9MFY12 core net profit met expectations, representing 74.8% and 74.7% of consensus and our full year forecast respectively. The impairments were related to a write-down of goodwill from the acquisition of the Omni Centre in Miami, Florida, certain casinos and provincial casinos’ assets in its UK operations and the carrying value of its casino concession agreement in Egypt.
Sequential results impacted by UK casinos. Given Genting Malaysia’s high base of its preceding earnings in 2Q12, earnings in 3Q12 declined by 25.4% q-o-q thanks to a drop in business volume, lower luck factor and some bad debt write-offs from its UK operations. This was largely expected as its UK casino operations have benefitted from exceptionally strong win rates in 2Q12 which resulted in it registering EBITDA growth of 278% q-o-q and 141% y-o-y.
Malaysian casino ops resilient. The group’s domestic gaming profit declined by a marginal 2% as a result of higher marketing costs. Revenue was up 2% despite lower win rates as relatively healthy domestic gaming volume growth was sufficient to offset the poorer win rates. The group’s Malaysian casino operation, comprising the bulk of group earnings at 83%, reported double-digit volume growth in VIP gaming and mid single-digit growth in mass market gaming. Meanwhile, overall visitor numbers rose 2% y-o-y as domestic day trippers continued to contribute the bulk of the total arrivals at a steady 74%.
Source: OSK
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