Genting advances on gains from sales of power biz

-A +A

KUALA LUMPUR (Aug 14): Genting Bhd shares rose on Tuesday after the company said it would reap RM1.9 billion from the proposed sale of its power business to 1Malaysia Development Bhd (1MDB), according to the company's detailed statement.
At 9.26am, Genting gained four sen to RM8.92 with 626,100 shares traded.
Late Monday (yesterday), the gaming group announced that it had entered into agreement to sell its entire stake in power business in Genting Sanyen (Malaysia) for RM2.108 billion. The group is also selling parcels of land on which the power plant is located.
"The Group is expected to record a one-off net gain of approximately RM1.9 billion from the proposed disposals, contributing to an increase of approximately 52 sen to Genting's consolidated EPS and NA per share for the current financial year.
“However, following the proposed disposals, the earnings contribution from the group’s power division will be reduced," said the statement.
It added the proposed disposals will not have any material impact on Genting's consolidated gearing.
CIMB Research in a note Tuesday said it maintained its Outperform rating on Genting and raised its target price for the stock to RM11.20.
“We valued its stake at RM1.6 billion in our RNAV; the sale therefore creates an additional 20 sen per share of value.
“Our core FY12-14 EPS forecasts are cut by 5-7% from the loss of income following the sale. However, Genting will recognise a RM1.9 billion extraordinary gain to be booked into FY12 EPS. Outperform maintained. The sale of non-core assets is a positive catalyst,” said CIMB Research.