Target RM5.70 (Stock Rating: ADD)
Although
there have been no material developments since the launch of the
Genting Integrated Tourism Plan (GITP) three weeks ago, GENM, during our
6th Malaysia Corporate Day, reinforced our view that 2015 will be the
year to watch. We remain comfortable with our FY15 forecast, which is
23% ahead of consensus. No change to our EPS estimates and RNAV-based
target price. We maintain our Add recommendation. The key catalyst is
execution of the GITP.
What Happened
GENM participated in CIMB's 6th Malaysia Corporate Day.
The key takeaway was that operations across the globe from Malaysia to
New York are well positioned to create more value. The RM5bn capex of
the GITP will reinvent Resorts World Genting (RWG) into a world-class
destination, the UK operations have undergone a major renovation
programme and are leveraged to the UK economic recovery, Resorts World
New York (RWNY) still has room to maximise yields and, last but not
least, the Bimini operations have extended the Resorts World franchise
into the Florida and South American market and have begun building up a
valuable database while patiently waiting for any potential gaming
liberalisation in Miami.
What We Think
2015 is the year to watch. 2015
is the year when everything starts to come together. The GITP will
start to take effect, with the 1,300-room expansion of the First World
Hotel and the opening of the 20th Century Fox theme park. In the UK,
Resorts World Birmingham will come onstream in early 2015 with its 30
tables and 150 slots while, in the US, RWNY will have maximised its
efficiency after more than three years in operation and the start-up
losses in Bimini should dissipate. Meanwhile, GENM should start to reap
the development potential of its prime 14-acre Miami waterfront
landbank, which has doubled in market value since the group acquired it
in 2010.
What You Should Do
Top pick in gaming.
GENM remains one of our top picks in Malaysia and in regional gaming.
It is a tourism proxy for Malaysia's key Economic Transformation
Programme (ETP) and valuations remain compelling at more than a 55%
discount to the Macau average.
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