PETALING JAYA: The lacklustre share price performance of Genting Bhd
is unwarranted given the hospitality group’s strong earnings recovery, says Maybank Investment Bank (Maybank IB) Research.
In a report, the research house said Genting’s share price eased 2% year-to-date, while the FBM KLCI eased 11%.
“Genting’s share price weakness is unjustified, considering that its earnings have been recovering well to near pre-Covid levels driven by the return of visitors to both 49%-owned Resorts World Genting and 53%-owned Resorts World Sentosa,” it noted.
According to Maybank IB Research, the share price weakness was more likely due to foreign selling from the weaker ringgit compared to the US dollar.
The research house added that since inflation in the United States has tapered down, and the ringgit is likely to recover against the dollar backed by the prospect of the Federal Reserve cutting the interest rate, it hopes the foreign selling will decrease.
“Our FX Research Team forecasts the US dollar/ringgit to recover to 4.600 by end-2024, and 4.500 by mid-2025 from 4.718 as at June 30, 2024.
“We expect this to narrow Genting’s valuation discount to sum-of-parts (SOP) per share to 60% from 65% currently,” Maybank IB Research noted.
Additionally, the research house said Genting’s 20%-owned TauRx Pharmaceuticals may accelerate the group’s earnings.
On July 1, 2024, TauRx said it submitted a United Kingdom Marketing Authorisation Application for its experimental drug, hydro methylthionine mesylate (HMTM) for treatment of mild cognitive impairment and mild-to-moderate stages of Alzheimer.
“We understand that TauRx ought to receive a reply by year end.
“Based on our estimates, if HMTM is approved and TauRx is valued at US$15bil, our SOP-based target price (TP) for Genting could be raised to RM9.35,” it noted.
In light of more favourable conditions, Maybank IB Research said it will maintain its “buy” call on Genting with a RM5.84 TP.
