KUALA LUMPUR (Sept 13): Genting Bhd’s (KL:GENTING) new floating liquefied natural gas (FLNG) facility could potentially add RM613 million per annum to its net profit from FY2027 onwards, and RM1.27 per share to fair value. 

“We estimate it (the FLNG) could contribute a revenue of US$704 million (RM3.1 billion) per annum (p.a.), based on annual production of 65.2 MMBtu (one million British thermal units) and an LNG price of US$10.80/mmbtu (10-year average), and a net profit of US$141 million (RM613 million) p.a., assuming a 20% net margin to Genting from FY2027F (forecast) onwards,” said CIMB Securities in a note on Friday.

Meanwhile, the research firm said funding for the FLNG facility should not be an issue, as Genting had RM7.2 billion in cash (ex-GENM’s (Genting Malaysia Bhd), GENS’ (Genting Singapore Ltd) & GENP’s (Genting Plantations Bhd) cash) at end-2Q2024.

CIMB also noted that Genting is in the “advanced stages” of securing project financing from a group of Chinese and international lenders.

It said that the FLNG would be installed in West Papua (Indonesia), while the feed gas for the facility will be supplied from Genting’s Kasuri Block concession, with the first drop of LNG scheduled for 3Q2026.

Notably, Genting awarded a US$1 billion contract to Wison New Energies Co Ltd for the construction of an FLNG facility that was to be deployed at Teluk Bintuni, West Papua in June 2024. 

The LNG facility is expected to have an annual capacity of up to 1.2 million tonnes. 

Meanwhile, CIMB said, citing Genting president and chief operating officer Datuk Sri Tan Kong Han at the group’s recent shareholders meeting, that Genting is still keen on listing its US resorts/casinos business. 

“We estimate Genting Americas, with five resorts/casinos, will have an FY2027 Ebitda (earnings before interest, taxes, depreciation, and amortisation) of circa US$500 million (RM2.2 billion) on a status-quo basis,” said CIMB.

“This may help illuminate the value of Genting’s US assets and re-rate its share price towards our sum-of-parts (SOP)-based target price (TP), which already values them at an EV (enterprise value) of RM16.7 billion,” CIMB added. 

CIMB maintained a “buy” rating on Genting, with a TP of RM6.65.  

At the time of writing on Friday morning, Genting’s shares were up four sen, or 1% at RM4.19, with market capitalisation of RM16.2 billion.