KLCI Stock - GENTING / 3182 - 2010 Quarter 3

Company Info

Market Capital (Capital Size)	41,963,248,001 (Very Large)
Par Value	RM 0.10

My Analysis

Forecast P/E now	(11.3-0.075)/0.3781 = 29.69 (High)
Target Price	6.81+0.075 = 6.88 (PE 18.0, EPS 0.3781, DPS 0.075)
Decision	NOT BUY
Comment	Revenue decreased but still higher than preceding year corresponding quarter, eps decreased and lower than preceding year corresponding quarter(exclude one time gain income), free and net cash flow decreased, liquidity ratio decreased to high level now, gearing ratio at high level now, payables period increased, CPO price increasing
First Support Price	10.3
Second Support Price	10
Risk Rating	MODERATE

Research House

AMMB Target Price	12.35 (2010-10-18)
UBS Target Price	14.35 (2010-10-21)
Credit Suisse Target Price	13 (2010-11-15)
Golman Sachs Target Price	11.7 (2010-11-15)
AFFIN Target Price	12 (2010-11-26)
CIMB Target Price	15.2 (2010-11-26)
ECM Target Price	12.05 (2010-11-26)
MIMB Target Price	11.8 (2010-11-26)
OSK Target Price	14.16 (2010-11-26)
RHB Target Price	12.8 (2010-11-26)
TA Target Price	13.11 (2010-12-20)

Accounting Ratio

Return on Equity	7.16%
Dividend Yield	0.66%
Profit Margin	36.23%
Tax Rate	13.82%
Asset Turnover	0.2764
Net Asset Value Per Share	4.05
Net Tangible Asset per share	3.04
Price/Net Tangible Asset Per Share	3.42
Cash Per Share	4.61
Liquidity Current Ratio	3.2575
Liquidity Quick Ratio	3.1665
Liquidity Cash Ratio	2.798
Gearing Debt to Equity Ratio	1.3762
Gearing Debt to Asset Ratio	0.425
Working capital per thousand Ringgit sale	102.6%
Days to sell the inventory	23
Days to collect the receivables	60
Days to pay the payables	163

My notes based on 2010 quarter 3 report (number in '000):-
- The Group registered a revenue of RM3,909.2 million in the current quarter compared with RM2,401.6 million in the previous year’s corresponding quarter, registering an increase of 63%

- The increase came mainly from the Leisure & Hospitality Division with the commencement of operations of Resorts World Sentosa (“RWS”) in Singapore in the first quarter of this year. Revenue from Resorts World Genting (“RWG”) decreased mainly due to lower business volume and weaker luck factor in the premium players business. The revenue from the UK casino operations decreased mainly due to poor luck factor and the weaker Sterling Pound. However, the business volume has shown improvement over the previous year’s corresponding quarter

- Increased revenue from the Plantation Division was due to higher palm products prices and higher FFB production

- The marginally lower revenue from the Power Division was due to lower generation of electricity by the Kuala Langat power plant

- Despite the higher average oil prices, revenue from the Oil & Gas Division decreased due to the lower share of entitlement in China

- The Group’s profit before tax for the current quarter was RM1,418.3 million compared with RM805.5 million in the previous year’s corresponding quarter, an increase of 76%

- The higher adjusted earnings before interest, tax, depreciation and amortisation (“EBITDA”) from the Leisure & Hospitality Division was mainly attributable to RWS. However, lower revenue and an increase in expenses contributed to lower EBITDA from RWG. The EBITDA of the UK casinos was also affected by lower revenue. Included in the EBITDA of the Leisure & Hospitality Division were start up costs for the development and operation of a video lottery facility at the Aqueduct Racetrack in the City of New York, United States of America by the GENM Group

- The increased EBITDA from the Plantation Division was due to higher revenue

- Lower revenue from the Power and Oil & Gas divisions resulted in the lower EBITDA from both these divisions

- Included in the current quarter’s profit before tax is a one-off net gain of RM413.6 million arising from Deferred Consideration. Net impairment losses recorded in the current quarter amounted to RM250.6 million

- The Group registered a profit before tax of RM1,418.3 million in the current quarter compared with a profit before tax of RM1,593.2 million in the preceding quarter

- The EBITDA of RWS was lower in the current quarter due to the lower luck factor in the premium players market. EBITDA from RWG also decreased due to lower volume of the premium players business and higher expenses. The EBITDA of the Leisure & Hospitality Division for the current quarter also included the start up costs for the development and operation of a video lottery facility in New York by the GENM Group

- Higher EBITDA from Plantation Division was mainly due to higher palm products prices together with higher FFB production

- The higher EBITDA from the Power Division was due to the higher generation of electricity in the current quarter from the Meizhou Wan power plant.

- The lower EBITDA from the Oil & Gas Division was due mainly to lower average oil prices and lower share of entitlement in China during the current quarter

- The profit before tax of the Group in the current quarter included a one-off net gain of RM413.6 million arising from Deferred Consideration and net impairment losses of RM250.6 million

- Estimate next 4Q eps after 2010 Q3 result announced = 0.0945*4 = 0.3781, estimate PE on current price 11.3 = 29.69(DPS 0.075)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.1985*4 = 0.794, estimate highest/lowest PE = 13.53/11.22 (DPS 0.075)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.2813*1.15 = 0.3235(15% increased), estimate highest/lowest PE = 21.54/2 (DPS 0.072)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.0661*4 = 0.2644, estimate highest/lowest PE = 26.77/23.18 (DPS 0.072)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.0999*4 = 0.3996, estimate highest/lowest PE = 19.09/15.62 (DPS 0.07)
- Estimate next 4Q eps after 2009 Q2 result announced = 0.0577*4 = 0.2308, estimate highest/lowest PE = 33.23/27.64 (DPS 0.07)
- Estimate next 4Q eps after 2009 Q1 result announced = 0.0574*4 = 0.2296, estimate highest/lowest PE = 28.88/23 (DPS 0.07)

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