Genting Bhd provided a cheaper exposure to Maybank Investment Bank’s (Maybank IB) investment thesis on 53%-owned Genting Singapore PLC (GENS) and Genting Malaysia Bhd (GEM).
“GENS has been recovering above pre-COVID levels. Genting’s shareholders also get a secondary exposure to 49%-owned GENM’s Resorts World New York City (RWNYC) potentially winning a downstate commercial casino license in New York City.
“Traditionally, GENS and GENM account for 70 to 80% of Genting’s own SOP valuation (including Resorts World Genting (RWG) licensing and management fees). Based on our estimates, Genting is trading at <10x FY24E PER and <1.0x FY24E P/BV,” it said in its note today (Jan 8).
Maybank IB maintains its BUY call with higher RM5.84 SOP-TP , an increase of 6%.
It also maintain our earnings estimates but roll forward our valuation base year to end-FY24E from end-FY23E.
“Utilising our revised TPs for GENS, SGD1.21 compared to SGD1.16 previously, and for GENM, RM2.93 compared to R2.70, we raise our SOP-TP for GENT to RM5.84, an increase of 35 se, on an unchanged 60% discount to SOP/sh.”
The research house said ringgit recovery will be positive for Genting’s valuation, and its recovery will likely to narrow its discount to SOP/sh valuation.
“Our observation over the last 15 years reveals a strong correlation between MYR/USD and Genting’s discount to SOP/sh valuation likely due to its high foreign shareholding.
“We note that foreign investors tend to BUY or SELL Genting’s share when the ringgit appreciates or depreciates. Our house view is that the MYR/USD exchange rate will appreciate to 0.23 vs. 0.22 currently.
“Thus, we expect Genting’s discount to SOP/sh valuation, which is currently 65% or -2SD to its 25-year mean, to narrow this year to 60%.
It added there is also a ‘call option’ on 20%-owned TauRx Pharmaceuticals Ltd (Not Listed), a leader in tau-based research in Alzheimer’s disease.
“(TauRx) is developing a drug to combat Alzheimer’s disease. We understand that TauRx has submitted its lead investigative drug, hydromethylthionine mesylate (HMTM) for consideration for approval in the United Kingdom via the Medicines and Healthcare Products Regulatory Agency.
“We currently value TauRx at only USD1 billion. Our TP for Genting may be revised to more than RM8 should TauRx be valued at USD15 billion as once widely reported.
