Period 3Q12
Actual vs. Expectations The 3Q12 core profit of RM418.3m beat our estimate
with the 9M12 core profit to date of RM1.23b accounting for 81% of our FY12
fullyear estimate and 77% that of the market consensus estimate.
The variance between
the actual number and our forecast is due chiefly to the lower than expected taxation
charge (lower by RM51.9m or 36% QoQ). Its casino earnings meanwhile were fairly
in line.
Dividends No
dividend was declared as expected
Key Results Highlights
The 3Q12 reported net profit plunged 62% QoQ to
RM190.3m due mainly to a sum of RM178.9m in impairment losses. (RM87.5m for
Omni Center in Miami, RM64.5m for certain provincial casinos in UK and RM26.9m
for a concession agreement in Egypt)
The Malaysian casino
operation reported 3Q12 adjusted EBITDA, which dipped 6% QoQ despite a flattish
top line due to a lower hold percentage at the VIP market. YoY, the revenue
rose slightly by 1% while the adjusted EBITDA was flat on a weaker luck factor.
After an impressive
2Q12 numbers, UK casinos turned into a loss at the adjusted EBITDA level of RM13.8m
as the revenue contracted 39% QoQ due to a lower business volume and poorer
luck factor at its London casinos. There was a higher sum of bad debts written
off in the 3Q12 as well. YoY, the revenue fell 14%.
The results from the USA operations remained strong in 3Q12,
with the adjusted EBITDA rising 1% QoQ, although the revenue slid 1% as net wins
rose 4%. A YoY comparison is not meaningful as the racino was launched only in Oct
2011.
Outlook 4Q is
a seasonally strong quarter due to the yearend holiday season. Yield management
initiative and new hotel rooms at Genting Highlands should help to improve
earnings while the RWNYC numbers are sustainable. However, the UK operation
could see continued tough times due to its VIP-centric nature.
Change to Forecasts We
have raised our FY12-FY14 EPS by 2%-5% as we revised our effective tax rate
assumption to 23% in FY12 from 26%, and to 25% for both FY13-FY14 from 26%
previously.
Rating MAINTAIN OUTPERFORM
Valuation Our
price target is now RM4.19/SOP share, upgraded slightly from RM4.18/SOP
share.
Risks Unfavourable luck factor.
Source: Kenanga
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