KUALA LUMPUR (June 1): Shares of Genting Bhd got off to a firm start in June after the conglomerate announced the completion of clinical trials of an Alzheimer’s drug by its 20.3%-owned company, TauRx Pharmaceuticals Ltd.
The stock opened 12 sen or 2.53% higher at RM4.87 at the opening bell and surged to a high of RM5.34 before closing 49 sen or 10.32% higher to RM5.24, for a market capitalisation of RM20.32 billion.
Some 89.15 million shares changed hands.
JPMorgan, in a research note, highlighted TauRx's initial data from the LUCIDITY Phase 3 clinical trial, which it reckoned tilted towards the positive side.
“TauRx’s lead investigative oral drug, HMTM, has been tested in 598 people with Alzheimer’s. After a 12-month blinded study, participants have moved forward to an additional one-year open label phase.
“The output indicates that participants who received HMTM declined at a rate substantially less than is typical for Alzheimer’s, for both cognitive and functional end points, across a broad range of severity from mild cognitive impairment to moderate Alzheimer’s,” the research house said.
A check on Bloomberg shows 13 analysts have a "buy" call on Genting, while there are two "hold" calls, with the highest target price set at RM7 and the lowest at RM5.37.
On May 26, Genting posted that its net loss for the first quarter ended March 31, 2022 (1QFY22) widened quarter-on-quarter (q-o-q) to RM199.68 million from RM129.81 million due to a weaker performance across most key operations. The 1QFY22 net loss marked Genting’s eighth straight quarterly loss since the Covid-19 pandemic outbreak.
Contributions from the leisure and hospitality division fell 12% q-o-q to RM955 million from RM1.08 billion on a weaker performance across the board, with the exception of Singapore which staged growth even before Malaysia's border reopening in April.
The group also recorded higher finance costs and depreciation and amortisation in the quarter.
Revenue for 1QFY22 fell 13% to RM4.21 billion from RM4.84 billion for 4QFY21, largely due to a 51% decline in the plantation segment's contribution of RM513.8 million from RM1.04 billion previously.
On a year-on-year basis, Genting managed to narrow its net loss to RM199.68 million or 5.19 sen per share, from RM331.76 million or 8.62 sen per share, as revenue rose 87% to RM4.21 billion from RM2.25 billion in 1QFY21.
This was mainly due to revenue from the leisure and hospitality division doubling to RM3.33 billion from RM1.44 billion, resulting in segment profit almost tripling to RM955 million from RM332.5 million amid the gradual resumption of economic activities.
In a research note on May 27, Kenanga Research highlighted that Genting’s earnings came in below expectations.
It has revised its target price for the stock to RM5.86 from RM6.12 previously but believes the group remains a good economic recovery play as its businesses should recover quickly from the lifting of cross-border restrictions.
“We foresee a better FY22 for Genting with more mutual vaccinated travel lanes opening up borders between countries. Both Genting Malaysia Bhd and Genting Singapore should see higher visitor arrivals to boost earnings.
“Meanwhile, Genting Plantations Bhd is also set to benefit from the still high crude palm oil prices,” it said.