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Tuesday, October 25, 2011

GENTING - RPT repeated (CIMB)

Genting Malaysia’s proposed acquisition of its IT services provider, though fairly priced and yielding cost benefits, is its fourth RPT in as many years and may not go down well with investors. We view any share price weakness as an opportunity to accumulate the stock.
We do not expect a material earnings impact from this small acquisition.

Genting Malaysia remains an OUTPERFORM and our top pick in the Malaysian gaming space. We raise our SOP-based target price after rolling over our investment horizon to end-2012.

Any share price weakness from this news should be viewed as an opportunity to accumulate the stock. Genting Malaysia’s defensive earnings and strong operating cash flow are appealing in uncertain times like these. Further out, its investment proposition lies in its gradual transformation into a formidable global player. All eyes should be on the opening of the Aqueduct racetrack in New York this Friday, 28 Oct.

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