KUALA LUMPUR: Shares in Genting Bhd rose to its highest in two months in early trade Monday after it reported improved results across its major operating divisions in the second quarter.
The group climbed 1.22%, or six sen to RM4.99, its highest since end-June 2021. It has risen some 13.9% so far this year.
For the second quarter ended June 30 (2Q21), Genting made a loss of RM563mil compared with a loss of RM786mil a year ago.
Its revenue for the quarter was up at RM2.93bil from RM1.1bil previously.
In the first six months (1H21), it posted a smaller net loss of RM895.28mil on revenue of RM5.19bil.
RHB Research said Genting’s 1H21 core loss of RM187mil is within its estimate, but lower than the street forecast.
“While its near-term leisure and hospitality earnings may continue to be sporadically affected by Covid-19, the pace of recovery seen in the US market is picking up.
“The stock’s 6.3x FY22F EV/EBITDA vs the c.11x regional peer average makes it an attractive option for a recovery play, premised on pent-up demand for leisure activities,” it said, adding that it has a “buy” call on Genting with a target price of RM6.47.
Maybank Investment Bank Research said 2Q21 and 1H21 losses were in-line but nil dividend was a disappointment.
It said the 2Q21 core net loss of RM234mil brought 1H21 core net loss to RM493mil was within its expectations.
“Though the 1H21 core net loss was 5x that of our previous FY21 core net loss estimate of RM99mil, the results were within our expectation as we had expected Resorts World Genting to reopen in Sept 2021 and drive Genting to profitability in 2H21.
“That said, no dividends were declared in 2Q21 which came as a negative surprise to us,” the research house said.
It said Resorts World Las Vegas was tracking within its expectations but still do not expect it to be profitable.
“We widen our FY21E core net loss by nearly 3x but leave our FY22-FY23E core net profit little changed. With two major catalysts shelved, we cut our SOP-based target price to RM5.58 from RM6.26.
“In our view, Genting is still good as a liquid Covid-19 recovery play but we prefer Genting Malaysia,” it said.