KUALA LUMPUR: The outlook on Genting Bhd
is picking up steam following an outperformance in the recent quarter, underpinned by an ongoing recovery in its operations.
According to Hong Leong Investment Bank (HLIB) Research, the strong results was owing to stronger-than-expected topline and positive operating leverage from Genting Singapore.
"Genting is on track for sustained recovery momentum, with multiple factors in play contributing to its positive outlook," said the research firm in its results review.
In the first quarter ended March 31 (1Q24), Genting’s net profit surged to RM588.9mil or an earnings per share (EPS) of 15.29 sen compared with RM98.04mil, or 2.55 sen, achieved in the same quarter last year.
Group revenue rose 28% to RM7.43bil against RM5.82bil a year ago, contributed mainly by the leisure and hospitality division.
HLIB said the group is expected to benefit from the continued recovery in foreign visitations at both Resorts World Genting and Resorts World Singapore, driven by the increasing frequencies of global flights (particularly outbound flights from China), as well as the visa-free travel pact between China and both Malaysia and Singapore.
In addition, it said the performance of Resorts World Las Vegas is projected to be underpinned by the growth in convention visitations and major events in Las Vegas.
HLIB maintained its "buy" call on Genting with a higher target price of RM7.60, revised from RM7.12 previously, as it imputed forecast changes to the group's subsidiaries.
"We continue to like Genting for its well-established operational presence across diverse regions, mitigating regulatory and country risks.
"At its present valuation, we are of the opinion that Genting is undervalued as it does not sufficiently capture the potential recovery of both Genting Singapore and Genting Malaysia," it said.
Meanwhile, TA Securities Research raised its FY24-25 earnings projections on Genting by 25-42% after factoring in higher contribution from Genting Singapore and higher losses in Empire Resorts.
"We upgrade Genting sum-of-parts-valuation to RM5.77/share (from RM5.54 previously) after revising Genting Singapore's and Genting Malaysia’s discounted cash flow valuations accordingly with higher holding company discount of 40%.
"We believe Genting would benefit from increasing foreign buying interest in Malaysia," it said in its update.
