KUALA LUMPUR (June 14): Hong Leong IB Research said Genting Malaysia Bhd’s (GenM) share prices slid 13.1% from 52-week high of RM6.38 (May 25) to a low of RM5.54 (June 13) before creeping up to end at RM5.63 yesterday, mainly driven by: 1) A sluggish 1Q17 results; 2) The recent 3.9% m-o-m slump of pound sterling against ringgit as its UK’s leisure & hospitality business accounted about 10-15% of EBITDA; 3) The earlier-than-expected tourism tax (to be imposed as early as Aug 17) and 4) Potential delays in the opening of new amenities of Genting Integrated Tourism Plan (GITP).
In a trading idea note today, the research house said that currently, GenM is trading at 15x FY18 P/E (8.5% below its average 10-year average P/E of 16.4x), supported by a strong 11.2% earnings CAGR for FY16-19.
“We believe such valuations and steeply oversold positions have priced in most of the negatives, providing sufficient margin of safety to cushion further plunge in sharp share.
“Given the formation of Tweezers bottom pattern and upticks in daily slow stochastic and MACD histogram, we expect prices to inch up further in the near term.
“A decisive breakout above the immediate resistance of RM5.74 will likely to lift share prices higher towards RM5.86-6.06 levels. Key supports are near RM5.48-5.54. Cut loss at RM5.43,” it said.