CIMB Research downgrades Genting to Hold, cuts target price to RM9.90

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KUALA LUMPUR (Nov 24): CIMB Research has downgraded Genting Bhd to a Hold (from Add) at RM9.40 with a lower target price of RM9.90 (from RM11.50) and said Gentin’s 9M14 core net profit of RM1.4 billion was below house expectations, at 62% of its previous full-year and consensus forecasts on poor performance across the board at Genting Malaysia Bhd, Genting Plantations Bhd and Genting Singapore.

In a note Nov 23, the research house said no interim dividend was declared in 3Q, as expected.

“Upon transfer of coverage, our FY14-16 EPS forecasts are cut following our earnings cuts for GengP, Gen and GenS. We also introduce a new target price of RM9.90, still based on 20% holding company discount to our RNAV of RM12.40 (lowered from RNAV of RM14.34 after GenS’s target price was lowered from S$1.72 to S$1.22).

“With total return of only 6.2%, we downgrade our rating from add to Hold as continued operational headwinds faced by GenS and concerns about the competitive landscape at the Las Vegas strip will continue to weigh on investor sentiment,” it said.

CIMB Research advised investors to switch from Genting to GengM for exposure to the gaming sector.