Stocks In Focus MY (Genting Malaysia, Tenaga Nasional, M’sia Airports Holdings) – 25/04/14
Genting Shows Interest To Construct Second Casino In New York
• Genting Malaysia is looking to expand its presence in New York, US, following its decision to submit an application fee to the New York State Gaming Commission, which marks its interest to establish a second casino in the Big Apple.
• The new facility that the Genting group is seeking to build in New York will be a full-fledged casino, and will complement the Aqueduct Casino that is located in the heart of New York and an integrated casino-resort that the group is planning to build in Las Vegas.
• Following its success in Singapore, the Genting group is currently engraving its global mark in every major gateway, and looking for opportunities in the UK, New York, Miami, Las Vegas, Japan and Sydney.
Significance: Market watchers are neutral on the move, as the new gaming facility will be in upstate New York, which is deemed less attractive and, hence the revenue enhancement and investment value are expected to be relatively small.
TN Posts Strong First Half Net Profits
• Tenaga Nasional’s (TN) 2Q14 net profit saw a year-on-year increase of RM398 million from RM1.3 billion to RM1.7 billion on the back of revenue rising 13 percent to RM10 billion mainly due to increase in sales of electricity in the peninsula and Sabah.
• Meanwhile, the first half of FY14 saw TN’s year-on-year net profits rose 26.8 percent to RM3.4 billion with year-on-year revenue rising to RM19.6 billion from RM18 billion.
• TN’s chief executive officer Datuk Seri Azman Mohd said that 1H14 had been technically challenging for the firm on coal plant outages and low hydro availability due to the dry season in 2Q14. This mandated TN to fully utilise its gas plants which resulted in increased usage of more expensive energy sources.
Significance: Separately, TN signed a memorandum of understanding with a US-based company, Trilliant, which is a smart grid platform company following the US-Asia Pacific comprehensive energy partnership’s high level meetings.
Maybank Kim Eng Research Maintains “Sell” Call On MAH, Target Price RM7.03
• In a research note, the house said Malaysia Airports Holdings’ (MAH) 1Q14 core net profit of RM123.5 million was slightly ahead of expectations, at 31 percent of house and 29 percent of street FY14 forecasts.
• “The upcoming two quarters may see a slight reduction in traffic growth rates due to the aftermath of MH370 incident, but it should not be alarming,” says Maybank Kim Eng Research. “The growth story remains solid, but MAH is in a capital intensive stage of its business cycle.”
• The research house has kept its earnings forecasts intact for the stock and opines it is expensive with a high debt burden relative to its peer group.
Significance: Maybank Kim Eng Research maintains “Sell” call on MAH with a target price of RM7.03 based on 10.3 times FY15 EV/Ebitda, which is a 10 percent premium to global peers after considering MAH’s strong traffic growth potential.
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