Genting, subsidiary in for a better 2024

PETALING JAYA: After being hit hard by Covid-19, Genting Bhd and its subsidiary Genting Malaysia Bhd are making a decent comeback.

Visitor arrivals to its resorts-cum-casinos have reached pre-Covid-19 levels and analysts said the group is primed for a better 2024.

“For Resorts World Genting (RWG), we note that in the fourth quarter 2023 (4Q23), visitor arrivals grew to 5.8 million or circa 95% of 4Q19 levels which is a post-Covid high.

“For financial year 2024 (FY24), we expect RWG visitor arrivals to recover another 12% year-on-year to reach the FY19 high of 24 million, backed by inbound tourism into Malaysia,” said Maybank Investment Bank (Maybank IB) Research.

As for Resorts World Singapore (RWS), the high margin 4Q23 mass market gross gaming revenue (GGR) hit 110% of 4Q19 levels. Going forward, the research firm expects RWS mass market GGR to hit 120% of FY19 levels on recovering Chinese tourism.

Genting posted 4Q23 core net profit of RM305.4mil, bringing the FY23 sum to RM1.21bil.

Meanwhile, Genting Malaysia’s 4Q23 core net profit came in at RM183.2mil and the full year at RM583.6mil.

Between the two, Maybank IB said Genting is a cheaper proxy to Genting Malaysia, as well as to Genting Singapore plc. However, it is trimming FY24/FY25 earnings per share by 4%/5%, due to higher impairments of trade receivables and depreciation at Genting Singapore.

On Genting Malaysia, it said the company guided that RWG is likely to generate earnings before interest, taxes, depreciation and amortisation margin of 31%, going forward, despite the two percentage-point hike in sales and service tax from March 1.

On the closure of the Circus Palace and Hollywood casinos for renovation, it also guided that the existing SkyCasino has sufficient capacity to cope for the rise in gaming volume.

Analysts believe the closure could also be part of the cost optimisation effort to provide some buffer against the rise in service tax and utility charges.

Meanwhile, Hong Leong Investment Bank (HLIB) Research sees multiple factors in play contributing to Genting’s positive outlook.

“The group is expected to benefit from the continued recovery in foreign visitations at both RWG and RWS, driven by the increasing frequencies of global flights, particularly outbound flights from China, as well as the visa-free travel pact between China and Malaysia, plus Singapore.”

According to the research firm, RWS could also see spillover benefits from a series of prominent music concerts scheduled in Singapore in late 2023 and 2024. Furthermore the performance of Resorts World Las Vegas is projected to be underpinned by the growth in convention visitations and major events in Las Vegas.