Genting Bhd’s (GENT) 2QFY24 net profit jumped 49.3% YoY to RM239.7m, predominantly driven by higher contribution from the plantation and oil & gas segments. Stripping out non-operating items, 1HFY24 core net profit of RM1,179m exceeded our and market expectations, accounting for 67% and 68% of full-year estimates respectively. The discrepancy in our forecast was mainly due to higher-than-expected contribution from Singapore. As we cut our earnings forecasts on Genting Malaysia and raise the contribution from Singapore, our FY24-26F estimates are adjusted up by an average of 8%. Our SOTP-based TP remained unchanged at RM6.00. Maintain Outperform. An interim dividend of 6.0sen per share was declared.

• 2QFY24 revenue rose 3.0% YoY. Leisure and hospitality segment posteda 6% YoY growth, mainly on higher contribution from Malaysia, the UK &Egypt and the US. Resorts World Las Vegas recorded higher revenue dueto higher business volume from both gaming and non-gaming segments.However, this was partly offset by lower contribution from the power andplantation segments. Power revenue fell 14% YoY due to lower generationfrom Banten Plant while plantation (-7% YoY) was dragged by lowerdownstream sales.

• 2QFY24 headline net profit jumped 49.3% YoY, while core profit rose21% YoY. This was largely driven by stronger upstream plantation profit onbetter margin and higher oil & gas profit due to the increase in global crudeoil prices. Lower losses in joint ventures and associates.

• Outlook. We expect GENS to continue explore opportunities to developintegrated resort (IR) outside Singapore following its decision to withdrawfrom Japan in 2021. Other jurisdictions that are also looking into legalizinggambling include United Arab Emirates and Thailand. We believe that it ismore likely for these new jurisdictions to develop an IR instead of casinoonly operation. This would increase GENS’ success rate, given the group’sexperience in operating both gaming and non-gaming business.Meanwhile, RWS should continue to benefit from higher visitation andtourism activities, particularly after the relaxation of visa regulationsbetween China and Singapore that took effect in February 2024.

Source: PublicInvest Research - 30 Aug 2024