KUALA LUMPUR (Dec 7): CGS-CIMB Securities has maintained its “add” rating for Genting Malaysia Bhd (GenM) at RM2.61, with a lower target price (TP) of RM3.25, after the gaming group raised its effective stake in Empire Resorts from 66.6% to 76.3% by buying the Series F Convertible Preferred Stock from Kien Huat Realty for RM438.5 million.
In a note on Tuesday (Dec 6), the research house said assuming full conversion of the entire Series F, Series G and Series L into common stock, GenM’s effective shareholding in Empire Resorts will be approximately 76.3%, versus 66.6% previously.
“We see this acquisition as a negative development for GenM, as we project Empire Resorts to still be loss-making over the next five years, and this acquisition increases our projected net debt/earnings before interest, taxes, depreciation and amortisation for GenM by end-financial year ending Dec 31, 2023 from 2.49 times to 2.63 times.
“We reiterate 'add'. Our sum-of-parts-based TP is trimmed to RM3.25,” it said.