Genting Berhad: Still a Good Buy

Maybank IB has put out their recommendation for Genting Berhad. That is: Maintain a buy at RM6.36 targetting a price of RM8.85. Maybank also expect a re-rating to be doen to Genting Berhad as they hold Genting Signapore at the entry price of S$0.33 cents,far below that of the current S$0.95 cents.

There was a good opening buzz at Genting’s integrated resort. Sentosa Island saw a 20% year-on-year (y-o-y) surge in visitors in the first two days of Chinese New Year. Some 142,000 people visited the island. The casino, where 270 tables, about half the total, were opened, attracted 35,000 people, reported Channel News Asia. Universal Studios, open for “sneak peeks” at a nominal SG$10/head (RM24) charge, was also reportedly very busy.

RWS achieved S$40 million in gaming gross in its first 36 hours of operation, according to a report by Inside Asian Gaming. Annualised, this works out to S$9.7 billion, well above the S$2.9 billion consensus forecast. Note that this number cannot be confirmed as management is “unable to disclose any numbers”.

RWS appears set to be fully operational by May. Universal Studios will fully open in mid-March, all 500 plus casino tables in four to six weeks and all 1,300 hotel rooms by April.

Genting Singapore reported its 2009 result last Friday. For the year, it generated S$491 million of revenue, down 22%, and reported a S$278 million net loss (2008: S$124 million net loss). However, that result is going to be treated as academic history as Genting Singapore will be far different this year following the opening of RWS. Maybank IB maintains their Genting Berhad forecasts pending release of its result on Thursday.

However, they do provide some caveats.

There is upside risk to their forecasts. FY10 earnings forecast used includes S$2.6 billion revenue and S$298 million net profit at GS. Annualised, the reported S$40 million casino revenue in the first 36 hours is a massive S$9.6 billion. Of course, the first day spike is unlikely to be sustainable.