We have also revised GenS’s FY11F earnings projection upwards by 33% for this reason. Our FY09F-FY10F earning forecast for GenS remains unchanged. Due to our higher fair value for GenS, our RNAV-based fair value for Genting Bhd has been raised from RM7.46/share to RM8.95/ share.
Previously, we had assumed that visitor arrivals would only expand 5% to 11.4 million in FY11F and 4% to 11.9 million in FY12F driven by traffic to RWS’ non-casino attractions. We had assumed that the number of casino patrons would remain constant throughout the 10 years from FY10F.
We are, now, assuming that the number of visitors would expand 18% to 12.9 million in FY11F and 15% to 14.8 million in FY12F. We are keeping our assumption of 10.9 million visitor arrivals for FY10F versus management’s guidance of 12-13 million.
GenS yesterday proposed a 1-for-5 rights issue at S$0.80/ share. This is at a 33% discount to GenS’s closing price of S$1.19/share. Total proceeds from the rights issue would amount to S$1.63bil. The theoretical ex-rights price is estimated at S$1.13/share and GenS is expected to trade exrights on Friday, 18 September.
About 60% of the rights proceeds would be used to fund investments/acquisitions while the balance 40% would be used for working capital (including repayment of bank borrowings).
Interest income from the rights issue of an estimated S$41mil could turn GenS into a profitable position in FY10F based on our estimated net loss of S$10mil for the group.
However, looking ahead to FY11F, then GenS’s fully diluted EPS would shrink 7% to 3.14 cents Singapore due to the increase in number of shares from its rights issue.
Genting Bhd would have to fork out about RM2bil or S$839mil to subscribe for its portion of GenS’s rights issue. We estimate Genting Bhd’s FY10F net profit to decline by 7% if the group were to borrow fully to finance its subscription of the rights issue.
Sponsored Links
No comments:
Post a Comment