Genting looks fairly valued, for now: Affin Hwang
NST Business
KUALA LUMPUR: Affin Hwang Investment Bank Bhd has downgraded Genting Malaysia Bhd to “hold” from “buy”, despite raising its target price to RM6.00.
The firm believes that Genting is fairly valued, hence the limited upside potential to its new target price.
“While the company’s prospects still look strong, we think any significant upside would only materialise in the second half of 2018, as the 20th Century Fox theme park in Genting Highlands should only be operational by end-2017,” Affin Hwang said in a report today.
It said market sentiment on Genting seems to have improved in the past few months, as more may think growth will improve when more facilities under the Genting Integrated Tourism Plan (GITP) become operational. This is despite its core EBITDA (earnings before tax, interest, depreciation and amortisation) only growing by 5.3 per cent year-on-year (YoY) in 2016.
Although Affin Hwang expects core EBITDA growth of only 5.8 per cent YoY in 2017, it expects it to rise significantly to 21 per cent YoY in 2018, post the opening of the 20th Century Fox theme park there.
espite the lack of new amenities last year, overall visitation still grew by five per cent YoY, which Affin Hwang believes is due to an increase in both local and foreign visitors, as the weaker ringgit has made Genting Highlands a cheaper alternative to its regional peers.
“We expect the US dollar/ringgit to trade between 4.20-4.30 in 2017,” it added.