KUALA LUMPUR: Kenanga Research continued optimism on the future of Genting Bhd backed by the reopening of China's early this year and the opening of international borders.
Genting Singapore Ltd.'s (GenS) first quarter financial year 2023 (Q123) results, according to the research firm, exceeded market expectations, with its core earnings tripling year over year (y-o-y) as tourists flocked back in large numbers.
It said that the core net profit for Q123, which came in at S$131.2 million, was barely 20 per cent of the consensus projection for the entire year.
"However, we consider the results as within market expectation as we expect stronger quarters ahead for GENS as tourist arrivals accelerate," it said.
Meanwhile, the firm said the two-year streak of lacklustre earnings endured by GenS had ended in the first half of the financial year 2022 (1HFY22) due to the opening of international borders and China's reopening early this year.
"And, the same would apply to Genting Malaysia Bhs (GenM) as well.
"All this should eventually benefit parent-company Genting," it said.
Kenanga Research has kept its FY23/FY24 earnings forecasts of parent Genting.
Despite the boost from China's reopening from January 2023, the firm said the group to a certain extent is constrained by the availability of flights and affordable fares, as well as inflation crimping consumer spending.
"Nonetheless, the company is ready to cater to more visitor arrivals with its ongoing Resorts World Genting (RWS) 2.0 expansion plan.
"We maintain our forecasts, target price of RM5.86, and Outperform call for parent Genting," it added.