PP 7767/09/2010(025354)

18 March 2010

Malaysia Corporate Highlights

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

New s Upda te
18 March 2010
MARKET DATELINE

Genting Malaysia Share Price

Fair Value
:
:
RM2.82
RM2.90
Recom : Market Perform
Another MGM Notes Investment of US$18m (Maintained)

Table 1 : Investment Statistics (GENM; Code: 4715) Bloomberg: GENM MK

Net Net
FYE Turnover Profit ^ EPS ^ Growth PER P/NTA C. EPS EV/EBITDA P/CF Gearing GDY
Dec (RMm) (RMm) (sen) (%) (x) (x) (sen) (x) (x) (%) (%)
2009 4,991.8 1,323.7 23.2 2.4 12.2 1.6 - 5.6 9.7 cash 2.6
2010f 4,825.4 1,294.3 21.0 (9.4) 13.4 1.6 20.0 5.7 10.6 cash 2.4
2011f 5,018.2 1,382.1 22.4 6.8 12.6 1.5 22.0 4.9 9.9 cash 2.6
2012f 5,219.0 1,452.9 23.6 5.1 12.0 1.3 4.1 9.5 cash 2.8
Main Market Listing / Non-Trustee Stock / Non-Syariah-Approved Stock By The SC * Consensus Based On IBES Estimates

^ Excluding EI

♦ Another MGM notes investment. Genting Malaysia, has subscribed to Issued Capital (m shares) 5,901.5
US$18m (RM60m) of MGM Mirage Inc’s new US$845m 9.0% senior secured Market Cap(RMm) 16,052.9
notes due March 2020. Daily Trading Vol (m shs) 11.2
52wk Price Range (RM) 1.84 – 3.02
♦ Notes secured by MGM Grand Las Vegas. MGM intends to use the Major Shareholders: (%)
proceeds from the notes to repay a portion of its outstanding debts and for Genting Bhd 48.3
related fees and expenses. The notes are secured by a mortgage on MGM Free float 51.7
Grand Las Vegas and substantially all existing and future property of MGM
Grand Hotel, LLC, and upon receipt of the necessary gaming approvals, a
pledge of the limited liability company interests in MGM Grand Hotel, LLC. FYE Dec FY10 FY11 FY12
EPS chg (%) - - -
They are also general senior obligations of MGM, guaranteed by substantially
Var to Cons (%) 5.0 1.9 -
all of its subsidiaries, which also guarantees MGM's other senior
indebtedness, and equal in right of payment with, or senior to, all existing or PE Band Chart
future indebtedness of MGM and each guarantor.

♦ Decent returns…but relatively unexciting. This is GM’s third investment PER = 18x
in US gaming bonds, the first being its US$50m investment in May 09 of PER = 14x
PER = 10x
MGM’s senior notes due May 2014-2017 and the second being its US$15m
investment in Oct 09 of Wynn Resorts’ mortgage notes due 2017. This latest
investment has an even higher rate of return of 9% than the Wynn notes of
slightly >8%, but lower than the first MGM notes of 10.375-11.125%. As
always, if there is a default on the notes, GM would theoretically be able to
get a small share of MGM’s Las Vegas assets. We believe this investment Relative Performance To FBM KLCI
indicates that GM is still unable to find any regional expansion opportunities
which would be earnings-accretive and therefore generate excitement for the
stock, although these investments would provide better returns than current Genting Malaysia
fixed deposit rates for its RM5.3bn net cash hoard.

♦ Risks include: 1) a slower-than-expected global and regional economic FBM KLCI

recovery, which could affect domestic sentiment and visitor arrivals; 2) lifting
of domestic subsidies for food and transportation costs, which would lower
disposable income; and 3) intensifying competition from regional players.

♦ Forecasts and investment case. No change to our forecasts. We maintain

our SOP-based fair value of RM2.90, applying an unchanged 15% holding
company discount to GM’s SOP, taking into account the weak investor
sentiment due to the perceived cannibalisation caused by the Singaporean
IR’s, the corporate governance risk and the lack of additional capital
Hoe Lee Leng
management from its abundant cash hoard. Maintain Market Perform. (603) 92802184
hoe.lee.leng@rhb.com.my
Please read important disclosures at the end of this report.

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Table 2 : Genting Malaysia’s SOP Calculation

RMm Basis
Genting HK 579.8 Market price S$0.18
Gaming 14,844.2 DCF at WACC of 9.9%
Net cash 5,271.6 End-4Q09
Total 20,695.7 TOTAL

No. of shares (m) – fully diluted 6,104.6

SOP/share (RM) 3.39
Discount to SOP (15%) (0.51)

Fair Value 2.88

Source: RHBRI

Table 3. Earnings Forecasts Table 4. Forecast Assumptions

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

Turnover 4991.8 4825.4 5018.2 5219.0 No of visitor Gth (%) -4 2 2

Turnover growth (%) 2.1 (2.7) 4.0 4.0 Rev/visitor gth (%) 1 2 2
Hotels occupancy rate (%) 90 90 90
Operating Costs (2974.8) (3037.2) (3134.2) (3260.4)

EBITDA 2016.9 1788.2 1883.9 1958.7

EBITDA margin (%) 40.4 37.2 37.7 37.7

Depreciation (270.1) (259.1) (263.5) (271.0)

Net Interest 77.8 147.9 173.5 200.7
Associates (0.4) 0.0 0.0 0.0
EI (59.5) 0.0 0.0 0.0

Pretax Profit 1764.7 1725.4 1842.4 1936.8

Tax (441.5) (431.3) (460.6) (484.2)
PAT 1323.2 1294.0 1381.8 1452.6
Minorities 0.4 0.3 0.3 0.3
Net Profit 1323.6 1294.3 1382.1 1452.9

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.

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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
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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 : -

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.

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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.

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subject to the duties of confidentiality, will be made available upon request.

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actions of third parties in this respect.

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