July 2, 2010

GENM - Genting Malaysia slides on UK ops acquisition

Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
Research House: HWANGDBS

KUALA LUMPUR: Genting Malaysia's shares fell in early trade on Friday, July 2 after proposing to acquire Genting Singapore's under-performing UK operations, which analysts said was at the higher-end of peers' valuation.

At 9.16am, the share price was down 15 sen to RM2.59 with 10.34 million shares done.

The FBM KLCI was down 2.22 points to 1,306.54. Turnover was 46.62 million shares valued at RM47.65 million.

Hwang DBS Vickers Research said Genting Malaysia was acquiring Genting Singapore's under-performing UK operations at higher-end of peers' valuation.

It said the transaction was positive for Genting Singapore as it could focus more on Singapore, less pressure on balance sheet, room to explore other integrated resorts.

"But negative for Genting Malaysia. Expensive for risky market, minimal synergy, less efficient use of cashpile," it said.

"Maintain Buy on Genting Singapore (TP raised to S$1.25), but downgrade Genting Malaysia to Fully Valued (TP cut to RM2.30). GENTING BHD [] remains a Buy, TP adjusted to RM8.20," it said.


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