October 19, 2011

Genting Malaysia rises as it preps New York opening

Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
Research House: RHBPrice Call: BUYTarget Price: 3.90



KUALA LUMPUR: Genting Malaysia Bhd and Genting shares advanced on Wednesday, Oct 19 as the gaming group prepares to open the Resorts World Casino New York City (RWNY) on Oct 28, October 2011.

At 11.11am, Genting Malaysia was up 18 sen to RM3.68 with Genting gained eight sen to RM10.06.

RHB Research in a note Oct 19 said it was positive that RWNY was opening on schedule, and said it expects RWNY to contribute positively to earnings in the medium term.

The research house however said that the project cost had risen to US$580 million (from US$500 million previously), as the size of the racino had increased to include a third floor where the Central Park Events Center was.

RHB Research highlighted that it had yet to impute earnings contributions from this racino into our forecasts, but said that based on its relatively conservative estimates, this racino was expected to add about 10% p.a. to Genting Malaysia's (GM) net profit.

'We believe that as its earnings potential become clearer to investors, this could result in earnings upgrades for the stock and valuations would therefore look more attractive.

'No change to our forecasts and our SOP-based fair value of RM3.90. Maintain Outperform,' it said.

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