Maybank Investment Bank may have lowered its earnings estimates for Malaysian gaming giant Genting Berhad recently on slower than expected recovery of key subsidiaries, but it continues to maintain a “Buy” rating on the company’s shares due to the gradual recovery of the Malaysian ringgit.
In a Wednesday note, Maybank analyst Samuel Yin Shao Yang observed that the ringgit had recovered from a low of MYR4.68:US$1 in Q1 to MYR4.54:US$1 as cooler inflation in the United States eases pressure on the Federal Reserve Board to raise Fed Funds Rates further. The ringgit is expected to continue strengthening, Yang added, to an estimated MYR4.15:US$1 by end 2024, which bodes well for Genting Berhad shares.
“There is a strong correlation between the MYR/USD and Genting’s premium/(discount) … because of its high foreign shareholding,” Yang said. “We notice that foreigners tend to buy/sell Genting when the MYR appreciates/depreciates.
“While we continue to like [Genting] fundamentally as a post-COVID recovery play, more than a decade of historical data tells us that the recovering MYR is a share price catalyst.”
Yang recently cut 2023 earnings estimates for Genting subsidiary Genting Malaysia by 27%, citing the slower than expected return of international visitors to the company’s Malaysian integrated resort, Resorts World Genting (RWG), post-pandemic.
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