Stronger earnings from Genting Singapore beat analysts' expectation
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KUALA LUMPUR (Aug 3): Casino and resorts operator Genting Bhd's subsidiary Genting Singapore Plc (GES) has beaten analysts' expectation after it reported a net profit of S$143.3 million for its second quarter financial year 2017 (2QFY17) from S$10.5 million net loss in 2QFY16.
Genting owns 49.32% of Genting Malaysia Bhd (GenM), and a 52.84% stake in GES.
At 11.24am, Genting shares fell two sen or 0.2% to RM9.73 with 1.1 million shares traded. Genting was among the top decliners at Bursa Malaysia today.
In a note, Public Investment Bank maintains its "outperform" call on Genting with an unchanged target price of RM11.15.
"As such, we raise our FY17F earnings forecast by 6%," it said.
Its analyst Eltricia Foong said it is a sharp improvement for GES and the strong performance was largely attributed to lower impairment of trade receivables and higher operating margin.
"Adjusting for net exchange loss and gain on disposal, core net profit for 1HFY17 stood at S$303.7million.
"Cumulative 1HFY17 results made up of 63% of our full-year forecast. Although 1H17 has captured the effect of a seasonally stronger 1QFY17, we believe GES would continue to deliver stronger profit due to a more stable operating environment and rigorous credit policy," she said.
Foong said the medium- to long-term catalysts for Genting's include GES's possible venture into the Japanese gaming market, expansion of Resorts World New York and the completion of an integrated resort in Las Vegas.
Meanwhile, Hong Leong Investment Bank (HLIB) analyst Lee Meng Horng said 1HFY17 core profit after tax and minority interests (PATAMI) of S$311.8 million was above expectations, accounting for 64% and 57.9% of HLIB and consensus full year estimates, respectively.
HLIB maintained its "hold" rating and raised its target price to S$1.21 from S$1.11 for GES given the minimal organic growth outlook due to stiff competition and absence of high rollers despite the margin expansion and stable dividend policy.
"Possible expansion in Japan would be the upside catalyst which has yet to be factored in," it said.