Update on Genting Malaysia Berhad – 11 Aug 2017

Hi guys, just wanted to give an update on Genting Malaysia Berhad. You can find the previous update here and the original full coverage here. There hasn’t been much news on Genting Malaysia Berhad especially on its UK operations and its potential write off in its investment in the US. My latest Excel File Genting Malaysia Berhad Model v10

Maintain Call at BUY with TP of RM6.39 ( unchanged )

GMB has had a good month from July to August with a monthly return of 4.6% and  YTD return of 28.2%, though it actually returned -1% from the start of my coverage on 21 May 2017. It currently trades at RM5.87 with a P/E of 10.92 with an average share price (Jun – Aug) of RM5.83, which is slightly higher than my last update at RM5.79. It consistently hit above the RM6.00 mark from 25 July 2017 to 8 Aug 2017, with a bull trend from 3 July 2017 onwards. It might be a good time to sell for investors when it hits back above the RM6.00 mark again.

GMB Share Price Chart (Jun - Aug 2017)

GMB Share Price Summary ( Jun - Aug 2017)

Its Q1 2017 results was also out, and I had to apply the same treatment by taking out the Non-Operational Income portion to take a better look at its numbers. Its EBITDA and net income margins were 21.7% and 11.9%, which is higher than 1Q 2016 at 17.0% and 3.6% but lower than 4Q 2016 at 28.0% and 14.2%. GMB’s 1Q 2017 revenue and net income growth has not been encouraging from 4Q 2016, as it registered declines of 2.6% and 18.8% respectively. One of the risks I highlighted for GMB was that its debt coverage might not be sufficient and that had been true moving to Q1 2017 also. Its (Interest + ST Debt) / Op Cash Flow remains high at 131.3%, and so is its interest expense/EBIT at 8.1%.

GMB Financials Table (11 Aug 2017)

There has only been 2 updates in analyst rating, Public Bank (HOLD, TP:RM5.5) and UOBKayHian (HOLD, RM5.15). Public Bank raised its TP from RM5.1 but has maintained its HOLD position. Since there hasn’t been any major updates or changes in these 2 months and quarterly numbers are only indicative of a small part of the year, I will be maintaining my call at BUY with a TP of RM6.39, unchanged.

GMB Analyst Rating (11 August 2017)

Data from WSJ and i3 Investor

 

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