PP 7767/09/2010(025354)

Malaysia Corporate Highlights

RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

Re su l ts / Bri e fi ng No t e
MARKET DATELINE

1 March 2010

Genting Share Price

Fair Value
:
:
RM6.31
RM8.90
Recom : Outperform
(Maintained)
Better Years Ahead

Table 1 : Investment Statistics (GENTING; Code: 3182) Bloomberg: GENT MK

Net Net
FYE Turnover Profit ^ EPS Growth PER C.EPS* P/CF P/NTA EV/EBITDA Gearing GDY
Dec (RMm) (RMm) (sen) (%) (x) (sen) (x) (x) (x) (%) (%)
2009 8,893.6 1,218.0 28.3 (38.4) 22.3 - 6.9 1.7 6.4 Net cash 1.1
2010f 13,239.2 1,694.6 45.8 61.8 13.8 42.0 5.6 1.9 3.9 10.2% 1.5
2011f 15,601.3 2,075.6 56.1 22.5 11.2 52.0 4.5 1.6 3.9 Net Cash 1.8
2012f 17,497.4 2,484.3 67.1 19.7 9.4 4.2 1.7 4.1 Net Cash 2.2
Main Market Listing / Non-Trustee Stock / Non-Syariah-Approved Stock By The SC ^normalised * Consensus Based On IBES
^ li E i

♦ In line with ours, but above consensus. Genting’s FY09 normalised net Issued
RHBRI
Capital (m shares)
Vs. Consensus
3,703.6
profit was in line with our expectations, coming in at 95% of our FY09 Market Cap(RMm)Above 25,369.4
forecasts, but above consensus, comprised 126% of consensus forecasts. Daily Trading Vol In
(mLine
shs) 5.9
We believe the main discrepancy between the actual numbers and our 52wk Price Range Below
(RM) 6.40 - 9.25
Major Shareholders: (%)
forecasts was the higher-than-expected effective tax rate in 4Q09 of Issued Capital (m shares) 3,704.9
Kien Huat Realty Sdn Bhd 41.5
32.4% (from 23.7% in 3Q09), bringing FY09 effective tax rate to 29.5% Market Cap(RMm) 23,377.6
Free
Dailyfloat 58.5
(vs. our 25% projection). In FY09, Genting’s total EI loss was RM173.6m. Trading Vol (m shs) 5.7
Genting declared a 4.2 sen gross DPS (less 25% tax) in 4Q09 (4 sen in 52wk Price Range (RM) 3.08 – 7.87
4Q08), bringing total gross DPS for FY09 to 7.2 sen (less 25% tax) (7 sen Major Shareholders: (%)
FYE Dec FY07 FY08 FY09
in FY08), which translates to net payout of 17.7%, or net yield of 0.8%. Kienchg
EPS Huat Realty Sdn
(%) Bhd (5.9)
(6.0) 41.5
(6.0)
Freetofloat
Var Cons (%) (1.7) (0.0) 58.5
(14.5)
♦ EBIT margins fell in all divisions except for power. Core net profit fell
31.6% yoy on the back of a 2.1% yoy drop in turnover in FY09. The FYE
PE Dec Chart
Band FY10 FY11 FY12
relatively larger fall in net profit was due to a 5.4% drop in EBIT due to EPS chg (%) (3.2) (3.5) -
weaker margins recorded in all divisions except for power (+7%-pt yoy), Var to Cons (%) 9.0 7.9 -
higher net interest expense (+154% yoy) and higher minority interest
PE Band Chart
(due to higher contribution from Genting Singapore). (see Tables 2 and 3
for detailed breakdown).
PER = 20x
♦ Risks. The main risks include: 1) lower-than-expected visitors and PER = 15x
PER = 10x
revenue per visitor for Resorts’ operations; 3) larger-than-expected costs
of construction of the Singapore IR; (3) lower-than-expected casino
patronage in GIL’s UK operations; and (4) lower-than-expected CPO prices
for its plantations operations, amongst others. Relative Performance To KLCI

♦ Forecasts. We revised our forecasts down by 3.2-3.5% p.a. for FY10-11,

post-revision of our forecasts for Genting Malaysia, and introduce our FY12
Relative Performance To FBM KLCI
forecasts. We expect stronger earnings in the next few years coming from
contributions from Genting Singapore upon the opening of four hotels,
casino and the soon-to-be-opened Universal Studios; improved prospects
of the plantations division coming from higher CPO prices and improved Genting

FFB production; new contributions from its recently commissioned 366MW

power plant in Andra Pradesh; offset slightly by lower topline contributions
from the Malaysian casino; and lower contributions from its China power FBM KLCI
plant due to the recent spike in coal prices.

♦ Investment case. Post-earnings revision and after updating our revised

fair value for Genting Malaysia (to RM2.90 from RM3.00), the latest market
value of Landmarks, and the latest company net debt level for Genting
Hoe Lee Leng
(ex-GM and GS), our SOP-based fair value for Genting is reduced to (603) 92802184
RM8.90 (from RM9.45) (see Table 4). Maintain Outperform. hoe.lee.leng@rhb.com.my
Hoe Lee Leng
(603) 92802184
Please read important disclosures at the end of this report. hoe.lee.leng@rhb.com.my

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 1 March 2010

Table 2 : Earnings Review

FYE Dec 4Q08 3Q09 4Q09 % qoq % yoy FY08 FY09 % yoy Comment
(RMm)
Turnover 2390.2 2401.6 2320.1 -3.4 -2.9 9082.5 8893.6 -2.1 See Table 3
EBITDA 841.6 1115.9 744.0 -33.3 -11.6 3550.0 3455.6 -2.7 See Table 3
Depreciation -162.4 -173.6 -175.8 1.2 8.2 -624.5 -687.1 10.0
EBIT 679.2 942.3 568.2 -39.7 -16.3 2925.5 2768.5 -5.4 See Table 3
Exceptionals -781.5 -121.7 26.7 -121.9 -103.4 -1211.2 -173.6 -85.7 See Table 3
Net interest -15.3 -24.6 -41.8 69.9 173.2 -53.8 -136.4 153.5 See Table 3
Associate 8.7 9.5 32.6 243.2 274.7 74.3 70.0 -5.8 See Table 3
Pretax profit -108.9 805.5 585.7 -27.3 -637.8 1734.8 2528.5 45.8
Norm pretax 672.6 927.2 559.0 -39.7 -16.9 2946.0 2702.1 -8.3 Flow through from EBIT and higher net interest
expense
Taxation -190.9 -191.1 -189.6 -0.8 -0.7 -751.4 -745.6 -0.8 Due to non-deductible nature of impairment losses
in FY08
Discontinued 0.0 0.0 0.0 - - 0.0 0.0 -
op (paper)
MI 179.1 -243.1 -150.7 -38.0 -184.1 -414.1 -738.5 78.3
Net profit -120.8 371.3 245.4 -33.9 -303.3 569.3 1044.4 83.5
Norm Net 660.8 493.0 218.7 -55.6 -66.9 1780.5 1218.0 -31.6 Flow through from norm PBT and higher MI
EPS (sen) -3.3 10.1 6.6 15.4 28.3 83.9
Gross DPS 4.0 0.0 4.2 7.0 7.2 Final gross DPS of 4.2 sen less 25% tax declared
(sen) in 4Q09, bringing total gross DPS in FY09 to 7.2
sen (less 25% tax)
Margins
EBITDA 35.2 46.5 32.1 39.1 38.9
EBIT 28.4 39.2 24.5 32.2 31.1
Pretax (4.6) 33.5 25.2 19.1 28.4
Norm pretax 28.1 38.6 24.1 32.4 30.4
Tax rate (175.3) 23.7 32.4 43.3 29.5

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 1 March 2010

Table 3 : Segmental Review

FYE Dec 4Q08 3Q09 4Q09 % qoq % yoy FY08 FY09 % yoy Comment
(RMm)
Turnover
Gaming 1704.3 1644.6 1537.7 -6.5 -9.8 6251.0 6016.9 -3.7 Domestic gaming revenue expanded by 1.4%
yoy on the back of higher volume of business
offset by weaker luck factor in the premium
segment in FY09. In UK, a 24.1% yoy drop in
casino revenue caused by a decline in UK casino
drop of 7% yoy, weaker win % of 1.7%-pts and
weakening of GBP versus SGD of 10% yoy. (see
Genting Malaysia report 1 Mar 10 and Genting
Singapore report dated 22 Feb 10)
Plantation 138.2 176.3 216.9 23.0 56.9 936.5 675.4 -27.9 YoY decline due to 6% yoy drop in FFB
production and 31% drop in average CPO selling
price to RM2,236/tonne and 45% drop in average
PK selling price to RM1,030/tonne (see Genting
Plant report dated 25 Feb 10)
Properties 20.6 23.2 27.7 19.4 34.5 117.6 96.6 -17.9 Only 140 new units launched in FY09 (versus 541
units in FY08), due to continued weakness in
buyer sentiment and cautious bank lending
activities (see Genting Plant report 25 Feb 10)
Power 471.1 502.1 478.9 -4.6 1.7 1564.0 1871.0 19.6 Increase due to higher energy charges (gas
charges up by 66% yoy at end-1Q09), and
higher generation of electricity in Meizhou Wan
plant
Oil & Gas 51.0 38.3 40.4 5.5 -20.8 182.7 143.4 -21.5 Lower yoy average crude oil prices
Others 5.0 17.1 18.5 8.2 270.0 30.7 90.3 193.8 Including the bio-oil and plastic composite
businesses
Total T/O 2,390.2 2,401.6 2,320.1 -3.4 -2.9 9,082.5 8,893.6 -2.1
EBIT
Gaming 688.0 643.2 376.4 -41.5 -45.3 2229.3 1996.2 -10.5 Lower margins (-2.5%-pt yoy) due to weaker
luck factor in the premium player business in
domestic operations, pre-operating expenses of
S$115.6m recorded by Genting Singapore in
FY09, offset slightly by improved profitability in
the UK operations due to its cost rationalisation
exercise
Plantation 40.4 79.1 92.8 17.3 129.7 458.4 285.0 -37.8 EBIT margin fell 6.8%-pts in FY09 to 42.2% (from
48.9% in FY09) on the back of lower CPO prices
and higher production costs (+7.6% yoy)
Properties 3.4 4.5 3.3 -26.7 -2.9 25.9 21.2 -18.1 EBIT margin fell -0.1%-pt in FY09 to 21.9%
(from 22% in FY08), due to higher construction
costs
Power -20.5 83.3 103.1 23.8 -602.9 193.4 363.1 87.7 Higher margins (+7%-pt) of 19.4% in FY09
(from 12.4% in FY08) due to lower coal prices in
China plant and lack of windfall tax levy in FY09
Oil & Gas 22.8 4.8 -9.6 -300.0 -142.1 73.5 4.6 -93.7 Margins weakened (-37%-pt) on the back of
lower crude oil prices
Others -54.9 127.4 2.2 -98.3 -104.0 -55.0 98.4 n.m.
Total EBIT 679.2 942.3 568.2 -39.7 -16.3 2925.5 2768.5 -5.4
Exceptionals -781.5 -121.7 26.7 -121.9 -103.4 -1211.2 -173.6 NM Includes: RM30.4m for provision for diminution
in value of Genting Malaysia’s (GM) investment in
Star Cruise Ltd (SCL) recorded in 1Q09, a
RM49.6m share of loss in associate for a
reduction of property value in UK under Genting
Singapore (GS) in 2Q09; impairment loss of
RM75.7m on an Indonesian oil and gas asset in
3Q09; RM48.6m impairment loss on Walker
Digital in 3Q09; RM2.3m impairment loss on
other investments in 3Q09; offset by RM33m
gain on sale of investments recorded throughout
the year.
Net interest -15.3 -24.6 -41.8 69.9 173.2 -53.8 -136.4 153.5 Lower net cash balance of RM1.1bn (from
RM3.6bn at end-4Q08) and lower interest income
rates
Associate 8.7 9.5 32.6 243.2 274.7 74.3 70.0 -5.8 Lower despatch of power and lower interest
income from power associates
Total PBT -108.9 805.5 585.7 -27.3 -637.8 1734.8 2528.5 45.8
Margins
Gaming 40.4 39.1 24.5 35.7 33.2
Plantation 29.2 44.9 42.8 48.9 42.2
Properties 16.5 19.4 11.9 22.0 21.9
Power (4.4) 16.6 21.5 12.4 19.4
Oil & Gas 44.7 12.5 (23.8) 40.2 3.2
Total 28.4 39.2 24.5 32.2 31.1

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 1 March 2010

Table 4: Genting’s SOP Calculation

RMm Basis

Genting Malaysia 8,689.6 Fair value of RM2.90/shr

Genting Plantations 2,422.7 Fair value of RM5.85/shr
Genting Singapore 20,563.0 Fair value of S$1.35/shr
Management fees 5,260.0 DCF at WACC of 10.1%
30% discount (to factor difference in concession period) to US$0.94 EV per
Power
3,345.0 effective MW (price paid for Meizhou)
Oil & Gas 254.9 20% discount to sector average PER of 15x
Tangguh concession 1,848.0 Genting's share of profit
Landmarks 176.2 Market price
Net cash/(debt) (ex-Genting Malaysia) (1,362.3) 4QFY09
Sum of Parts 41,197.3

No. of shares (m) 3,704.9

SOP/share (RM) 11.12
Less: Holding company discount (20%) (2.22)
SOP/share (RM) 8.90

Table 5. Earnings Forecasts Table 6. Forecast Assumptions

FYE Dec (RMm) FY09a FY10F FY11F FY12F FYE Dec FY10F FY11F FY12F

Turnover 8,893.6 13,239.2 15,601.3 17,497.4 Msian Casino visitor gth (%) -4.0 2.0 2.0
Turnover growth (%) (2.1) 48.9 17.8 12.2 Revenue per visitor gth (%) 1.0 2.0 2.0
CPO Price (RM/t) 2,500 2,700 2,500
EBITDA 3,455.6 4,896.6 5,808.7 6,729.4
EBITDA margin (%) 38.9 37.0 37.2 38.5

Depreciation (687.1) (1,141.6) (1,236.2) (1,228.1)

Net Interest (136.4) 313.2 274.6 144.7
Associates 70.0 54.0 54.9 55.9
EI (173.6) - - -

Pretax Profit 2,528.5 4,122.0 4,902.0 5,701.8

Tax (745.6) (954.8) (1,090.7) (1,237.3)
PAT 1,782.9 3,167.2 3,811.3 4,464.5
Minorities (738.5) (1,472.6) (1,735.6) (1,980.2)
Net Profit 1,044.4 1,694.6 2,075.6 2,484.3
Core Net Profit 1,218.0 1,694.6 2,075.6 2,484.3
Source: Company data, RHBRI estimates

Chart 1: Genting Technical View Point

♦ Genting halted its 7-month uptrend after touching a
high of RM7.87 in Oct 2009.

♦ Thereafter, it traded sideways and mostly ranged

between the support of RM6.80 and the resistance
of RM7.45 from Oct 2009 to early Feb 2010.

♦ However, since late Jan 2010, the stock has been

trading on a retreating mode.

♦ It lost RM6.80 level in early Feb, and ended last

week at RM6.31, near a 6-month low of RM6.27.

♦ Technically, the stock could see further downside to

RM6.00 before seeing the return of bargain-hunting
support.

♦ To reverse the current downtrend, it must reclaim

the RM6.80 level and the 40-day SMA of RM7.08.

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IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank
Berhad (previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable
law. The opinions and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and
may differ or be contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This
report is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything
stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or
its associated persons may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and
objectives of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors
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equity securities or loans of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective
directors, officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking
or other services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or
more over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to
take on higher risks.

Market Perform = The stock return is expected to be in line with the KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

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securities, subject to the duties of confidentiality, will be made available upon request.

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