KUALA LUMPUR: Genting Bhd could face ongoing headwinds following a weaker first quarter, which was weighed down by MCO2.0.
According to Kenanga Research, the group’s upcoming 2QFY21 is likely to remain weak although recovery is expected to be swift once vaccination rates accelerate in the second half of the year.
“A mixed outlook in the upcoming 2QFY21 given the resurgence of COVID-19 cases in Malaysia and Singapore but should be able to be mitigated by the improving situation
in the UK and US.
“Overall, business volume is likely to recover strongly from 2HFY21 onwards due to the vaccination deployment where positive development has been witnessed in the western countries with higher vaccination rates,” it said.
The research house slashed FY21 and FY22 earnings forecasts by 40% and 7% as the resurgence of Covid-19 cases is expected to delay recovery.
It maintained its dividend assumptions.
Kenanga maintained “outperform” on the counter but lowered its targer price to RM5.58 from RM5.93 previously based on a five-year mean discount of 43% from 42.7% previously to its sum-of-parts valuation.
In 1QFY21, Genting turned to the red again with a core loss of RM109.2mil as opposed to Kenanga’s FY21 net profit forecast of RM1.16bil and consensus estimate of RM854.1mil.
Genting Malaysia widened losses due to MCO2.0 while Genting Singapore announced soft earnings.