“We leave our Genting Malaysia, Genting EPS estimates and TPs unchanged for now. With more than 10% upside potential, we upgrade Genting Malaysia, Genting to BUYs. We upgraded Genting Singapore to Buy on Feb 13, ” it said.
KUALA LUMPUR: Maybank IB Research has upgraded the Genting group to Buy as it believes the number of new Covid-19 related deaths have peaked.
It said on Thursday that as a result, the 12 month forward price-to-book value (P/BV) valuations of Genting Malaysia, Genting and Genting Singapore have troughed.
“We leave our Genting Malaysia, Genting EPS estimates and TPs unchanged for now. With more than 10% upside potential, we upgrade Genting Malaysia, Genting to BUYs. We upgraded Genting Singapore to Buy on Feb 13, ” it said.
Maybank IB Research said there could be more upside if Malaysia provides relief next week.
Under the stimulus budget and measures to offset the Covid-19, Singapore had provided property tax relief and delayed its GST rate hike.
“Recall from our earlier report that 12M forward P/BV valuations of Genting Malaysia, Genting during the SARS pandemic troughed in April 2003 when new deaths peaked.
“We gather that markets are forward looking and as new deaths peak, markets expect the negative impact outbreaks have on casino industries to peak as well and subside going forward, ” it said.
During this Covid-19 outbreak, new deaths peaked at 254 on Feb 13,2020 and has subsided.
As a leading indicator, new cases are falling rapidly from the peak of 15,158 on Feb 13,2020.
“The latter suggests to us that new deaths truly have peaked and the 12M forward P/BV valuations of Genting Malaysia, Genting and Genting Singapore have troughed.
“Our channel checks reveal that the Covid-19 outbreak caused visitation to integrated resorts in Malaysia/Singapore to have fallen 20-30% YoY/5070% YoY in the last three weeks, ” it said.
Maybank IB Research said this is higher than the percentage Chinese gamblers contribute to the gross gaming revenues of Malaysia (less than 10%) and Singapore (30%-40%) as locals have also stayed away.
But as winter enters spring, new cases and deaths tends to subside due to warmer weather. We hope this will compel Malaysia/Singapore to lift its partial/total ban on Chinese visitors and locals to patronise integrated resorts again, it said.
https://www.thestar.com.my/business/business-news/2020/02/20/maybank-ib-research-upgrades-genting-gentingm
