PP 7767/09/2010(025354)

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

Re su lt s / B ri efi ng N ot e
27 August 2010

MARKET DATELINE
Genting Share Price
Fair Value
:
:
RM9.00
RM11.00
Recom : Outperform
(Maintained)
Singaporean Dreams Coming Through

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 1,168.3 31.5 (31.4) 28.5 13.6 2.7 9.6 Net Cash 0.8
2010f 16,623.1 2,996.3 81.1 157.1 11.1 45.0 6.7 2.6 4.6 Net Cash 1.1
2011f 19,297.0 2,921.1 79.0 (2.5) 11.4 56.0 5.1 2.1 4.7 Net Cash 1.3
2012f 21,325.6 3,279.0 88.7 12.3 10.1 65.0 4.9 2.2 4.9 Net Cash 1.6
Main Market Listing / Non-Trustee Stock / Non-Syariah-Approved Stock By The SC ^normalised * Consensus Based On IBES
l

♦ Above expectations due to Singapore. Genting’s 1HFY10 normalised Issued

RHBRI
Capital (m shares)
Vs. Consensus
3,703.6
pretax profit was above expectations, coming in at 90% of our FY10 Market Cap(RMm)Above 25,369.4
Daily Trading Vol In
(mLine
shs) 5.9
forecasts and 111% of consensus forecast. We note that all the other
52wk Price Range Below
(RM) 6.40 - 9.25
divisions of Genting, with the exception of Genting Singapore, came in
Major Shareholders: (%)
within expectations. As noted in our report dated 13 Aug, although topline Issued Capital (m shares) 3,704.9
Kien Huat
Market CapRealty
(RMm)Sdn Bhd 41.5
numbers made up 56.5% of our revenue assumptions for Genting 33,343.7
Free
Dailyfloat
Trading Vol (m shs) 58.5
Singapore, EBITDA margins of 40.4% in 1H10 were much higher than our 5.7
52wk Price Range (RM) 6.20 - 9.06
projected 28.5% for FY10. This, together with the positive effective tax
Major Shareholders: (%)
rates in the 2Q10 (due to an S$86.8m deferred tax writeback) caused the FYE Dec FY07 FY08 FY09
Kienchg
EPS Huat Realty Sdn
(%) Bhd (5.9) (6.0)
(6.0) 41.5
outperformance in the bottomline. Genting declared a gross DPS of 3.3 sen Freetofloat 58.5
Var Cons (%) (1.7) (0.0) (14.5)
(less 25% tax) (2Q09: 3 sen) in 2Q10, in line with our expectations.

♦ More than 200% rise in core net profits. Core net profit rose more
FYE
PE Dec Chart
Band
EPS chg (%)
FY10
51.9
FY11
40.2
FY12
35.7
than 200% on the back of a 50.5% yoy rise in turnover. The significant Var to Cons (%) 80.2 41.2 36.5
increase in turnover and profit was mainly due to the contribution of
Genting Singapore’s IR, which contributed 48% to total gaming revenue PE Band Chart
and 52% to total gaming EBIT. EBIT margins in the gaming operations in
Malaysia and UK improved on the back of better luck factor, while EBIT PER = 20x
margins for the plantations division also rose on the back of higher CPO PER = 15x
PER = 10x
prices achieved. This was offset slightly by weaker margins in the property,
and oil & gas divisions. The relatively larger rise in core net profit was due
to the lower effective tax rates due to the lower tax regime in Singapore
Relative Performance To KLCI
coupled with the deferred tax writeback noted above (see Tables 2 and 3
for detailed breakdown).

♦ Risks. The main risks include: 1) lower-than-expected visitors and Relative Performance To FBM KLCI
revenue per visitor for Resorts’ operations; 3) larger-than-expected costs
of construction of the Singapore IR; (3) lower-than-expected casino
Genting
patronage in GIL’s UK operations; and (4) lower-than-expected CPO prices
for its plantations operations, amongst others.
FBM KLCI
♦ Forecasts. After imputing our revised Genting Singapore forecasts into
Genting’s model, we raise our net profit forecasts by 51.9% for FY10 and
by 35-40% for FY11-12. Note we had more than doubled our forecasts for
Genting Singapore for FY10 and by 100-160% for FY11-12 after the 2Q
results.

♦ Investment case. Post-earnings revision and after updating for the Hoe Lee Leng
latest market value of Landmarks, and the latest company net debt level (603) 92802184
for Genting (ex-GM and GS), our SOP-based fair value for Genting is raised Hoe Lee Leng
hoe.lee.leng@rhb.com.my
(603) 92802184
to RM11.00 (from RM9.30) (see Table 4). Maintain Outperform. hoe.lee.leng@rhb.com.my

Page 1 of 5
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 27 August 2010

Table 2 : Earnings Review

FYE Dec 2Q09 1Q10 2Q10 % qoq % yoy 1HFY09 1HFY10 % yoy Comment
(RMm)
Turnover 2102.7 3113.7 4085.1 31.2 94.3 2069.2 3113.7 50.5 See Table 3
EBITDA 805.0 1262.3 2063.6 63.5 156.4 1595.8 3325.9 108.4 See Table 3
Depreciation -169.4 -212.4 -342.7 61.4 102.4 -337.8 -555.1 64.3
EBIT 635.6 1049.9 1720.9 63.9 170.8 1258.0 2770.8 120.2 See Table 3
Exceptionals -48.2 -800.4 -34.9 -95.6 -27.6 -78.6 -835.3 962.4 See Table 3
Net interest -35.9 -76.2 -111.6 46.4 210.9 -70.0 -187.8 168.3 See Table 3
Associate 19.0 26.7 18.7 -30.0 -1.6 27.9 45.4 62.7 See Table 3
Pretax profit 570.5 200.0 1593.1 696.6 179.2 1137.3 1793.1 57.7
Norm pretax 618.7 1000.4 1628.0 62.7 163.1 1215.9 2628.4 116.2 Flow through from EBIT and higher net interest
expense
Taxation -181.6 -234.6 -176.8 -24.6 -2.7 -364.9 -411.4 12.7 Lower due to income subject to lower tax regime in
Singapore
Discontinued 0.0 0.0 0.0 0.0 0.0 -
op (paper)
MI -174.3 267.0 -677.2 -353.6 288.5 -344.8 -410.2 19.0 Due to maiden contribution from Genting
Singapore
Net profit 214.5 232.4 739.1 218.0 244.5 427.6 971.5 127.2
Norm Net 262.7 1032.8 774.0 -25.1 194.6 506.2 1806.8 256.9 Flow through from norm PBT and lower effective
tax rate
EPS (sen) 5.8 6.3 20.0 11.6 26.3 127.2
Gross DPS 3.0 0.0 3.3 3.0 3.3
(sen)
Margins
EBITDA 38.3 40.5 50.5 77.1 106.8
EBIT 30.2 33.7 42.1 60.8 89.0
Pretax 27.1 6.4 39.0 55.0 57.6
Norm pretax 29.4 32.1 39.9 58.8 84.4
Tax rate 31.8 117.3 11.1 32.1 22.9

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 27 August 2010

Table 3 : Segmental Review

FYE Dec 2Q09 1Q10 2Q10 % qoq % yoy 1HFY09 1HFY10 % yoy Comment
(RMm)
Turnover
Gaming 1433.9 2412.2 3477.5 44.2 142.5 2834.6 5889.7 107.8 Domestic gaming revenue expanded by 8.2%
yoy on the back of higher volume of business
and better luck factor in the premium segment in
1HFY10. In UK, casino revenue rose 6.9% yoy
due to better luck factor, offset slightly by
weakening of GBP versus SGD. In Singapore, the
maiden contribution from the IR operations
contributed 48% to total gaming revenue, due to
stronger-than-expected table drop and better
luck factor (see Genting Malaysia report 27 Aug
and Genting Singapore report dated 13 Aug)
Plantation 166.3 195.6 202.2 3.4 21.6 282.2 397.8 41.0 YoY increase due to 12% yoy rise in FFB
production and 15% increase in average CPO
selling price to RM2,550/tonne and 48% increase
in average PK selling price to RM1,470/tonne in
1H10 (see Genting Plant report dated 26 Aug)
Properties 24.0 20.1 33.1 64.7 37.9 45.7 53.2 16.4 Higher progress billings on completion of certain
phases of ongoing projects (see Genting Plant
report 26 Aug)
Power 392.5 444.2 311.5 -29.9 -20.6 890.0 755.7 -15.1 Decrease due to lower generation of electricity by
Meizhou Wan power plants
Oil & Gas 36.2 26.0 35.1 35.0 -3.0 64.7 61.1 -5.6 Decline due to lower share of entitlement in
China despite higher average oil prices
Others 49.8 15.6 25.7 64.7 -48.4 54.7 41.3 -24.5 Including the bio-oil and plastic composite
businesses
Total T/O 2,102.7 3,113.7 4,085.1 31.2 94.3 4,171.9 7,198.8 72.6
EBIT
Gaming 490.2 989.1 1479.3 49.6 201.8 1063.9 2468.4 132.0 Better margins overall from all countries. In
domestic business, margins higher by 1%-pt yoy
due to better luck factor in the premium player
segment. In UK operations, better luck factor
also pushed margins higher by 3.9%-pt yoy. In
Singapore, maiden contributions which
contributed 51.6% to group EBIT
Plantation 69.3 97.0 89.3 -7.9 28.9 118.7 186.3 57.0 EBIT margin rose to 45.2% in 1HFY10 (from
40.1% in 1HFY09) on the back of higher CPO
prices and higher production as well as lower
production costs (est -6% yoy))
Properties 5.1 8.7 8.2 -5.7 60.8 15.1 16.9 11.9 Higher margins of 15.7% versus 10.2% in
1HFY09 due to profits recognised from
completion of certain phases of ongoing projects
Power 79.5 133.5 113.4 -15.1 42.6 243.4 246.9 1.4 Higher margins (+5.3%-pts) of 32.7% (from
27.3% in 1HFY09) due to higher margins on the
Malaysian operations
Oil & Gas 4.6 4.6 13.1 184.8 184.8 19.5 17.7 -9.2 Margins weakened (-1.2%-pt) on the back of
lower share of entitlement in China
Others -13.1 -183.0 17.6 -109.6 -234.4 -202.6 -165.4 n.m.
Total EBIT 635.6 1049.9 1720.9 63.9 170.8 1258.0 2770.8 120.2
Exceptionals -48.2 -800.4 -34.9 -95.6 -27.6 -78.6 -835.3 NM Includes: net gain on dilution of Genting
Singapore’s (GS) shareholdings of RM436.3m,
fair value gain on derivatives of RM67.9m, net
fair value loss on financial assets of RM33.9m,
net impairment losses on Walker Digital of
RM110m and impairment loss on intangible
assets for GS's UK operations of RM1.15bn
(SGD478.1m)
Net interest -35.9 -76.2 -111.6 46.4 210.9 -70.0 -187.8 168.3 Higher interest expense charges from Singapore
Associate 19.0 26.7 18.7 -30.0 -1.6 27.9 45.4 62.7 Higher share of profit from the new power plant
in Andhra Pradesh and increased contribution
from the existing power plants in India
Total PBT 570.5 200.0 1593.1 696.6 179.2 1137.3 1793.1 57.7
Margins
Gaming 34.2 41.0 42.5 37.5 41.9
Plantation 41.7 49.6 44.2 42.1 46.8
Properties 21.3 43.3 24.8 33.0 31.8
Power 20.3 30.1 36.4 27.3 32.7
Oil & Gas 12.7 17.7 37.3 30.1 29.0
Total 30.2 33.7 42.1 30.2 38.5

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Table 4: Genting’s SOP Calculation

RMm Basis

Genting Malaysia 9,738.3 Fair value of RM3.25/shr

Genting Plantations 2,774.8 Fair value of RM6.70/shr
Genting Singapore 36,556.4 Fair value of S$2.40/shr
Management fees 5,270.7 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 32.8 20% discount to sector average PER of 13x
Tangguh concession 1,848.0 Genting's share of profit
Landmarks 179.1 Market price
Net cash/(debt) (ex-Genting Malaysia and
2QFY10
Genting Singapore) (5,320.0)
54,425.2
Sum of Parts

No. of shares (m) 3,704.9

SOP/share (RM) 14.69
Less: Holding company discount (25%) (3.67)
SOP/share (RM) 11.02

Table 5. Earnings Forecasts Table 6. Forecast Assumptions

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

Turnover 8,893.6 16,623.1 19,297.0 21,325.6 Msian Casino visitor gth (%) -4.0 2.0 2.0
Turnover growth (%) (2.1) 86.9 16.1 10.5 Revenue per visitor gth (%) 1.0 2.0 2.0
CPO Price (RM/t) 2,500 2,700 2,500
EBITDA 3,182.6 6,638.0 7,640.5 8,463.6
EBITDA margin (%) 35.8 39.9 39.6 39.7

Depreciation (687.1) (1,128.7) (1,224.0) (1,216.6)

Net Interest 136.5 422.0 337.8 247.0
Associates 20.4 83.3 85.5 87.8
EI (123.9) - - -

Pretax Profit 2,528.4 6,014.7 6,839.9 7,581.8

Tax (745.6) (1,308.7) (1,448.2) (1,595.2)
PAT 1,782.8 4,706.0 5,391.7 5,986.5
Minorities (738.5) (1,709.7) (2,470.6) (2,707.5)
Net Profit 1,044.3 2,996.3 2,921.1 3,279.0
Core Net Profit 1,168.3 2,996.3 2,921.1 3,279.0
Source: Company data, RHBRI estimates

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
independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial adviser. The appropriateness of a
particular investment or strategy will depend on an investor’s individual circumstances and objectives. Neither RHBRI, RHB Group nor any of its affiliates,
employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this report.

RHBRI and the Connected Persons (the “RHB Group”) are engaged in securities trading, securities brokerage, banking and financing activities as well as
providing investment banking and financial advisory services. In the ordinary course of its trading, brokerage, banking and financing activities, any member of
the RHB Group may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or
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 : -

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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.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended
securities, subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for
the actions of third parties in this respect.

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