*Technical tracker - HLIB Retail Research – 9 June 2022* *GEN | HLeBroking
*Technical tracker - HLIB Retail Research – 9 June 2022*
*GENTING: Another leg up?*
*TauRx, the next crown jewel? Following TauRx’s (20.3% owned by GENTING) announcement on 31 May that it is moving ahead for regulatory submission on its Alzheimer’s treatment, the group will follow up with an update at the 35th Global Conference of Alzheimer’s disease today. In our view, any positive finding is likely to create another up-leg in GENTING share prices due to potential value unlocking in TauRx.*
*To recap, TauRx aimed to be listed with a valuation of USD15bn back in 2016. However, the plan was put on hold as it failed in late clinical trial for its Alzheimer’s treatment. By taking the same valuation of USD15bn (if the drug is commercialized), this will translate to an effective stake of USD3.05bn, which is 64% of GENTING’s market cap based on the 8 June closing price. As the market has yet to bake in TauRx into GENTING’s valuation, any upward revision of its TP following the commercialisation of TauRx’s drug should bode well for share prices.*
*Better days ahead. Apart from the potential re-rating catalyst in TauRx, GENTING’s gaming business is set to recover and potentially turnaround in the subsequent quarters, after losing for 5 straight quarters. This is premised on (i) capacity increase in hotel operations; (ii) contribution from SkyWorlds; and (iii) the weak RM currency, which augurs well for both local tourism and foreign visitations. We continue to like GENTING due to its deep expertise and experience in managing the gaming and hospitality businesses and its well-spread operations across different regions, which helps to mitigate regulatory and country risks. All in, HLIB reiterates a BUY call with a target price of RM6.50, translating into a 21.7% upside from the current level. Downside risk is limited as the stock is currently trading at 8.47x FY23 EV/EBITDA (23% discount vs 5Y average mean of 11x).*
*Long-term resistance breakout. Technically, GENTING had performed a long-term resistance (RM5.27) breakout yesterday. Judging from the bullish MACD and RSI indicators, the successful breakout may spur prices toward RM5.50-5.62-5.79. Cut loss at RM5.04.*
*Collection range: RM5.20-5.27-5.34*
*Upside targets: RM5.50-5.62-5.79*
*Cut: RM5.04*
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