PETALING JAYA: Genting Malaysia’s (GenM) earnings could drop by about 18% this year in the worst-case scenario if Chinese and Singaporean tourists stop travelling to Resorts World Genting (RWG) for six months, according to PublicInvest Research.
It said the group’s first quarter (Q1) performance is also likely to be affected by public fears over the novel coronavirus outbreak.
Nonetheless, the research house highlighted that the expected opening of the new outdoor theme park by the middle of this year could help to boost visitor arrivals in the second half of the year.
GenM’s share price has fallen more than 10% recently to a low of RM2.92 from its recent peak of RM3.38 on market concerns over the virus outbreak’s impact. It closed 6 sen lower at RM2.97 on volume of 8.58 million shares yesterday.
GenM has announced the cancellation of all tour bookings from China for February as a precautionary measure to reduce the risk of the virus spreading.
Traditionally, the peak period for RWG is during the year-end and Chinese New Year holidays. PublicInvest believes that high visitor arrivals would probably have been captured between December 2019 and January 2020 prior to the scare.
Despite Chinese tourists accounting for only 4% of RWG’s visitor count, Public-Invest Research said public fears over the possible contraction of the virus will lead to even locals refraining from visiting crowded places such as theme parks and casinos.
At this juncture, the research house is maintaining GenM’s earnings forecasts.
“Trading at a one-year forward PER (price-to-earnings ratio) of 12 times, which is slightly above -1SD of 11 times, we think this presents a bargain-hunting opportunity. Hence, we raise our rating from neutral to trading buy.”
Imputting a PER of 11 times on its Malaysia’s earnings, the research house the sum-of-the-parts valuation will then fall to RM2.70.
“We see this level as the potential downside to its share price if the outbreak prolonged,” it added.
PublicInvest also forecast a regular FY19 dividend per share of 9 sen (excluding potential special dividend), translating to a yield of 3%.
In its latest quarterly results, GenM reported a net profit of RM410.84 million for the third quarter ended Sept 30, 2019 against a net loss of RM1.49 billion in the previous corres-ponding period.
from Business https://ift.tt/38iD0nP
via Latest News in UK
No comments:
Post a Comment