KUALA LUMPUR, April 4 — RHB Research has reiterated its “buy” call on Genting Malaysia Bhd (Genting) following the group’s purchase of the superyacht “Equanimity” for US$126 million (RM514.55 million), which complements its gaming and leisure business.
The research house said it was slightly positive on the purchase as it was also expected to improve Genting’s brand and increase VIP gaming volume.
RHB Research said the sale marks the highest recovery for the government from the 1Malaysia Development Bhd (1MDB) case, as the sum proposed by Genting was the highest bid since Equanimity was put on the block in Oct 2018.
“In addition, the deal was negotiated directly with the government and resulted in estimated savings of US$4.4 million. The purchase is also expected to save the government from paying RM2.0 million a month in maintenance costs,” it said in a research note today.
RHB Research said the purchase of Equanimity will enable Genting to differentiate itself from competitors with a unique edge for its high-roller gaming business.
“The reported initial amount paid to purchase the yacht was US$250 million, which has a marble interior, a spa and sauna, a 20-metre swimming pool, movie theatre and a helipad.
“We believe the facilities on the Equanimity will appeal to VIP customers on top of Genting’s existing luxurious offerings, which include five-star hotels at Resorts World Genting, private jets and helicopters, among others.
“Based on our channel checks, Equanimity can accommodate up to 22 passengers, excluding crew,” it said.
RHB Research trimmed its financial year 2019-2021 forecast earnings per share by three per cent to take into account higher depreciation expenses and maintenance costs for Equanimity.
It revised the target price to RMR3.90 with key downside risks to the call including fluctuations in the luck factor, a potential smoking ban for casinos, and any further hurdles prior to the opening of the outdoor theme park.
At Bursa Malaysia’s mid-day close, Genting shares were down four sen to RM3.24, with 2.69 million shares traded. — Bernama
