Hong Leong Investment Bank Bhd (HLIB) has maintained its HOLD call on Genting Bhd (GenT) but cut its target price to RM2.02 from RM2.35 after weaker-than-expected earnings, with the research house trimming its FY26 to FY28 forecasts by 31.2%, 28.1% and 25.0% respectively. The revised target implies 9.8% downside from RM2.24.
GenT’s 1HFY26 core profit fell 47.7% year-on-year to RM167.5 million, coming in below HLIB’s and consensus full-year expectations. HLIB said the negative deviation was mainly due to weaker performance from Genting Malaysia Bhd (GenM).
Revenue still rose 8.4% in the first half, supported by stronger contributions from the US and Bahamas and plantation operations. The US and Bahamas segment saw revenue jump 45.9% year-on-year, following the consolidation of the GERL Group and the commencement of initial full commercial casino operations at Resorts World New York City in April.
However, the stronger revenue did not translate into earnings growth. Second-quarter core profit fell 34.3% quarter-on-quarter and 46.6% year-on-year to RM66.4 million, with higher operating and financing costs linked to the New York casino weighing on profitability.
HLIB also pointed to elevated labour costs and softer premium gaming demand in the UK and Egypt operations.
Looking ahead, HLIB said the ongoing Iran war could create further headwinds through higher airfares and potential flight cancellations, which may dampen discretionary travel demand to regional leisure assets.
As of 2.33 pm, the stock price dropped 5.36% to RM2.12.
