"We believe 2018 would be an exciting year for the casino operators as the Genting Integrated Tourism Plan (GITP) expansion story should be in time to bear fruit while the recovery of rolling chip volume across the causeway should benefit GENTING.
"In addition, the impending legalising of casinos in Japan should boost sentiment for both GENS and GENTING based on past experience in the Singapore IR bidding back in 2006," it said.
The research firm added that Genting is trading at a huge dicount of 45% to its SoP valuation, which is unwarranted.
With regards to selling pressure on NFO players, Kenanga Research said it was partly attributed to the implementation of the GST, while depressed ticket sales were primarily due to competition from illegal operators.
"With share prices contracted to half their values in the past five years coupled with price
stabilisation in the past three months, stabilising ticket sales and improved luck factor, we believe the selling could have bottomed out. In addition, these two stocks also offer above-average dividend yields of 6%-8%."
With the seasonally strong Chinese New Year in 1Q 18, both casinos and NFOs should see better business volume, says Kenanga.
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