Analysts cut Genting and unit forecasts on weaker UK ops

PETALING JAYA: Genting Bhd and its unit Genting Malaysia Bhd reported recent results in line with market expectations but some analysts are cutting their forecasts for the companies’s future earnings to factor in weaker casino operations in Britain and capital expenditure (capex) for some of its projects.

“We tweak our FY2011-FY2012 forecast earnings by 2% to 4% to factor in weaker Britain operations, recent acquisition of Miami waterfront properties at US$236mil and capex for Birmingham NEC large casino,” Hwang DBS said in a note on Genting Malaysia yesterday.

It is also adjusting lower its forecast earnings for Genting’s FY2011-FY2013 by 3% to 5% to factor in minor earnings revision for its subsidiaries including Genting Malaysia.

Genting and Genting Malaysia stocks slid 32 sen or 3.27% and 9 sen or 2.64% respectively to RM9.46 and RM3.32 at the close yesterday, in line with the overall weaker broader market.

On Thursday, Genting posted a net profit that was 8.92% lower at RM673.22mil for the quarter ended June 30 compared with the corresponding quarter a year earlier due to the unfavourable win percentage in the premium players business of its Singapore gaming operations.

Genting Malaysia posted a 2.63% gain in net profit to RM313.75mil for the quarter ended June 30 compared with the same quarter a year ago, due to a 10% improvement in Malaysian gaming revenue, the progressive development of Resorts World New York and contributions from British gaming operations.

In the said quarter, Genting UK, slipped into a negative earnings before interest, tax, depreciation and amortisation of RM8mil.

“While negative, this is not alarming as we had flagged the risk of volatile earnings from its Britain operations, particularly from the London casinos which are VIP-centric,” CIMB Research said.

Meanwhile, Maybank cut its “buy” call on Genting to “hold” yesterday saying that volatile equity markets did not favour the high beta stock.