Thursday, January 2, 2014

RHB Research maintains Neutral on Malaysian gaming sector


Published: Monday December 30, 2013 MYT 8:38:00 AM 
Updated: Monday December 30, 2013 MYT 8:39:39 AM

KUALA LLUMPUR: RHB Research is maintaining its Neutral stance on the gaming sector heading into 2014, as it believes the potential earnings headwinds from Goods and Service tax (GST) implementation in April 2015.

It said on Monday there were relatively unexciting growth prospects for the Malaysian gaming secor vis-à-vis Macau’s casinos in the medium-term. Hence, investor were expected to stay on the sidelines.

“Among our coverage universe, Berjaya Sports Toto is the only BUY, given its relatively alluring annual dividend yield of 6.3% to 6.9%,” it said.

RHB Research said given the potential earnings erosion arising from GST and the relatively more muted growth prospects for Malaysia’s gaming companies vis-à-vis casino operators in Macau, it maintained its Neutral stance on the sector going into 2014.

“Among the stocks we cover, Berjaya Sports Toto (Buy, FV: RM4.46) is the only Buy, given its relatively appealing dividend yield of 6.3%-6.9%.

“While we find some comfort in Genting Malaysia’s (Neutral, FV: MYR4.56) proposed RM5bil capex to rejuvenate its flagship Genting Highlands resorts over the next 10 years, we hold the view that it is too early to quantify the potential earnings accretion, as the first phase of the proposed facelift will only be completed by 2H2015,” it said.

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