KUALA LUMPUR: Genting Bhd, whose shares have fallen sharply since end-February, has been upgraded to a "Buy" following purchases by Tan Sri Lim Kok Thay and his family, their first in nearly four years.
Over the past week, the Lim family acquired a total of 7.3 million shares valued at RM22.86 million, a move Maybank Investment Bank Bhd (Maybank IB) said reflects strong support for the Genting group.
Lim's private investment vehicle Kien Huat Realty Sdn Bhd bought six million shares, while his son Keong Hui acquired 1.26 million shares. Additionally, Genting chief executive officer Datuk Seri Tan Kong Han bought 100,000 shares for RM341,400.
Maybank IB believes that the recent acquisitions, made at valuations close to historic lows, indicate that the current share price may have already factored in all potential downsides the company has been experiencing.
Maybank IB analyst Samuel Yin Shao Yang noted that Genting shares had fallen by 18 per cent since the release of its financial results at the end of February.
Yin upgraded Genting to "Buy" with an unchanged target price of RM3.98.
Despite disappointing fourth-quarter 2024 (4Q24) results, he pointed out that the more than 10 per cent decline in share price presents a 23 per cent upside along with a three per cent dividend yield.
Potential near-term catalysts include the possible approval of TauRx's Alzheimer's drug and a positive resolution to the Nevada Gaming Control Board's (NGCB) investigation into Resorts World Las Vegas (RWLV).
However, Yin cautioned that a key risk remains the potential loss of Genting Malaysia Bhd's US$600 million lawsuit.
Genting's 4Q24 underperformance was largely attributed to RWLV's weak results, which the company blamed on warm weather in Las Vegas.
Additionally, the NGCB's investigation into RWLV for allegedly admitting illegal bookies has deterred some gamblers, he said in a note.
As a result, Genting's share price has fallen to levels last seen during the Covid-19 pandemic, approaching a 10-year low.
Yin noted that RWLV's weak performance continues to cloud Genting's earnings visibility, with 4Q24 Ebitda at just US$1.5 million compared to a quarterly average of US$48.8 million in FY23.
This ongoing weakness, he said, makes historical price-to-earnings ratio analysis less relevant.
Despite this, Yin remains optimistic about potential valuation reratings.
He highlighted two key near-term catalysts: the UK Medicines and Healthcare Products Regulatory Agency's expected decision on TauRx's Alzheimer's drug between April and June 2025 and a possible operational recovery at RWLV following a favourable NGCB investigation outcome.
Should TauRx's drug gain approval and the company's valuation reach an estimated US$15 billion, Genting's share value could rise to RM5.09 per share.
The primary near-term risk remains the US$600 million lawsuit against Genting Malaysia by its Bahamian partner, with a verdict anticipated by June 2025.