Maybank Investment Banking Group has maintained its “Buy” rating on shares of Malaysian gaming giant Genting Berhad and issued a highly attractive “blue sky scenario” target price on what is says is a noticeable undervaluation of the company’s shares.
In a Monday note, Maybank analyst Samuel Yin Shao Yang observed that Genting Berhad’s share price has been lacklustre this year – likely due to foreign selling on concerns around the strength of the Malaysian ringgit against the US dollar – but said such struggles were “unfounded” the recovery of its gaming interests.
In particular, Yin, pointed to the fact that both its 49%-owned Resorts World Genting in Malaysia and 53%-owned Resorts World Sentosa in Singapore were now operating at close to pre-COVID levels.
More importantly, however, the analyst says there are two key catalysts that could drive Genting Berhad’s share price northward. One is cooling inflation in the United States and the Malaysian ringgit recovering against the US dollar on the prospect of the Federal Reserve cutting interest rates.
“History also tell us that a firmer MYR against the USD has traditionally been positive for its valuations,” Yin wrote, adding, “We hope that the foreign selling of Genting shares will taper.”
Perhaps more intriguing is the prospect of an experimental Alzheimer’s drug developed by TauRx, of which Genting Berhad owns 20%, being approved for use by regulators in the United Kingdom by year’s end.
Should it receive the green light, TauRx would be valued at US$15 billion – enough to see Maybank up Genting Berhad’s target price from MYR5.84 currently to MYR9.35.
Genting Berhad, which recently reported a US$1 billion investment into its energy sector in a further bid to diversify, announced in late May a 36% year-on-year increase in revenues from its leisure and hospitality segment to MYR6.48 billion (US$1.38 billion) and a 40% increase in Adjusted EBITDA to MYR2.57 billion (US$547 million).
The company’s gaming operations include integrated resorts in Malaysia, Singapore and Las Vegas as well as casinos in New York, the UK and Egypt.
RelatedPosts
