KUALA LUMPUR (Jan 8): Genting Bhd was among the top gainers in early trade on Monday as investors cheered the potential upside from cheaper exposure to its 52.63%-owned Genting Singapore Ltd, which has recovered to above pre-Covid-19 levels.
Additionally, positive sentiments arose from the secondary exposure to Genting Malaysia Bhd's (GenM) Resorts World New York City Casino (RWNYC), which could win a down-state commercial casino licence in New York City, according to analysts.
Shares of Genting — the sixth top gainer on the local bourse — rose to an 11-month high of RM4.88 on Monday, 1.67% above the consensus target price (TP) of RM4.80, Bloomberg data showed.
There are currently 14 "buy" recommendations and one "hold" recommendation for the stock. The highest TP of RM6.95 is from Hong Leong Investment Bank Bhd (HLIB), while the lowest TP of RM4.30 is from Goldman Sachs.
Genting’s share price has risen steadily from a low of RM4.15 on Nov 10, 2023 to RM4.87 at the time of writing on Monday, with a market capitalisation of RM18.88 billion. There were 5.91 million shares traded.
Meanwhile, its 49.33%-owned GenM climbed to a high of RM2.88, its highest level since Oct 18, 2021, when the stock closed at RM2.94. It then pared its gains to RM2.86 — up six sen or 2.14% — valuing the group at RM16.98 billion. GenM was among the top 20 gainers on Bursa Malaysia.
Analysts covering GenM have 12 "buy" recommendations on the stock, five "hold" and one "sell", with a consensus TP of RM4.11.
Apart from Genting Singapore and GenM’s RWNYC, Maybank Investment Bank Bhd (Maybank IB) said the ringgit's recovery is also positive for Genting’s valuations.
“Our house view is that the MYR/USD exchange rate will appreciate to 0.23 versus 0.22 currently. Thus, we expect Genting’s discount to SOP (sum-of-parts)/sh valuation, which is currently circa 65% or -2 standard deviations to its 25-year mean, to narrow this year to 60%”.
It is worth noting that Genting has a call option in its 20%-owned TauRx Pharmaceuticals Ltd, which is developing a drug to combat Alzheimer's disease.
It is understood that TauRx has submitted its lead investigative drug hydromethylthionine mesylate (HMTM) for consideration for approval in the UK via the Medicines and Healthcare Products Regulatory Agency.
“We currently value TauRx at only US$1 billion (RM4.65 billion). Our TP for Genting may be revised to over RM8 should TauRx be valued at US$15 billion as once widely reported,” said Maybank IB, which maintains its "buy" call for Genting with a higher TP of RM5.84 (from RM5.49).
On GenM, Maybank IB said Resorts World Genting’s (RWG) visitor arrivals ought to recover to pre-Covid-19 levels this year, which will drive the group’s earnings for the financial year ending Dec 31, 2024 (FY2024) to recover 60% year-on-year. This will enable GenM to offer a dividend yield of more than 5.4% per annum.
The research house has reaffirmed its "buy" recommendation for the stock and has raised its TP to RM2.93, up from RM2.70 previously.
“A potentially positive catalyst this year is RWNYC securing a down-state commercial casino licence which could add 56 sen to our TP,” said Maybank IB.
“We hope results for RWNYC’s bid for a down-state commercial casino licence will be made known before year end. Should RWNYC be successful, we expect this to spur foreign interest in GenM shares. Note that the current foreign shareholding in GenM is at a multi-year low (end-3Q2023: 15%).
“If we may, another way of interpreting its low foreign shareholding is that downside risk to GenM’s share price from foreign fund outflows could be minimal,” it added.