Maybank has upgraded Genting Berhad to “Buy”, citing considerable upside to the current share price given the recent purchase of stock by the company’s controlling Lim family and the potential for improved performance at its US flagship Resorts World Las Vegas (RWLV).
In a Wednesday note, Maybank analyst Samuel Yin Shao Yang pointed to the fact that Genting shares had fallen more than 10% since the release of its “disheartening” 4Q24 financial results late last month. As a result, the stock has been trading at near all-time lows but Yin said he is confident the share price has been fully discounted suggesting it now offers 23% upside to investors.
It would also explain why the Lin family, through Lim Keong Hui as well as family trust Kien Huat Realty, recently spent MYR22.3 million to acquire7.3 million shares.
According to Yin, who notes that the group’s poor Q4 results were primarily due to a disappointing quarter at RWLV, a resolution to the Nevada Gambling Control Board’s investigation into the property’s past compliance failures looms as a near looms as one of a number of near-term catalysts for stock price improvement.
“On RWLV, Genting attributed [the Q4 result] to warm weather in Las Vegas but we gather that some gamblers avoided it as it is under investigation by the NGCB for admitting illegal bookies,” the analyst said.
“Thus, Genting’s share price fell to COVID-19 pandemic levels or close to a 10-year trough.”
While RWLV’s operations will “likely remain weak as long as it is under investigation”, the current valuation offers considerable upside with Maybank maintaining its price target of MYR3.98.
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