Morgan Stanley picks Genting Berhad over Genting Malaysia

    Morgan Stanley Research said in a note that consensus expectations of Genting Malaysia’s growth locally remain too high, and the company’s overseas earnings remain affected by losses in Resorts World Bimini.

    Giving Genting Malaysia an equal weight rating and a price target of RM3.80 ($0.91), Morgan Stanley said “expectations of growth with the refurbishment of Resorts World Genting are already priced in, and we see higher operating expenses with the opening of Resorts World Birmingham and lower earnings with higher interest costs.”

    For 15Q2, GENM reported revenue of RM2 billion ($477), down five percent quarter-on-quarter, but up four percent year-on-year.

    Conversely the analysts have upgraded Genting Berhad to overweight with a PT of RM7.40. 

    “We think earnings decline, mostly from forex losses and fair value loss on derivatives (for GENS), is priced in. We expect a rebound in earnings in 2H15, with resilient mass market growth in Singapore. Earnings contribution is also more diversified with increased contribution from the Oil & Gas operations.”

    Genting Berhad reported 15Q2 revenue of RM4.16 billion, down 8 percent YoY.