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On Monday, UBS analysts downgraded Genting Bhd stock (GENT:MK) (OTC: GEBHY (OTC:GEBHY)) from Buy to Neutral. The firm also reduced its price target to MYR3.10 from MYR5.90, citing concerns about growth momentum and dividend flow. According to InvestingPro data, the stock is currently trading near its 52-week low, with a market capitalization of $2.75 billion.
UBS analysts indicated that the growth momentum for Genting is expected to diminish in 2025 due to a high base in Malaysia and a slow recovery in Las Vegas. The potential capital expenditures by its subsidiary, GENM, in New York could further constrain the flow of dividends from GENM to Genting. Despite these concerns, InvestingPro analysis shows the company maintains strong financial health with a current ratio of 2.48, indicating ample liquidity to meet short-term obligations.
The analysts noted that the outlook in Singapore is improving, which should provide some downside support. Genting Singapore (GENS) is expected to benefit from a strong balance sheet and the launch of upgraded amenities, which are projected to support a steady dividend stream and earnings growth in the second half of 2025.
UBS forecasts flat earnings for Genting in the fiscal year 2025, with a dividend per share of RM0.11, suggesting a dividend yield of approximately 4%. The analysts consider Genting’s current trading at around a 66% net asset value discount as fair, aligning with its two-year average. InvestingPro data reveals the company has maintained dividend payments for 19 consecutive years, with a current price-to-book ratio of 0.36 and an impressive free cash flow yield of 18%. InvestingPro subscribers have access to 8 additional valuable insights about Genting’s financial health and valuation metrics.
In conclusion, UBS expressed a preference for Genting Singapore within the Genting group, followed by Genting Bhd and GENM, due to higher dividend and earnings visibility.
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