Maybank Investment remains positive on Genting casinos


KUALA LUMPUR: Maybank Investment Research expects 2018 earnings for Genting Malaysia  to rebound as the VIP win rate normalises and gaming volume increases.

Meanwhile, it expects earnings growth for Genting Singapore to shift from cost rationalisation in 2017 to VIP market recovery in 2018.

The research firm noted that the 9M17 earnings before interest, tax, depreciation and amortisation (Ebitda) of Resorts World Genting (RWG) fell 15% on-year due to lower-than-expected 9M17 VIP win rate. 

"Assuming normal RWG VIP win rate, coupled with our unchanged RWG VIP volume growth forecast of +15% p.a. from 2018-2019, we maintain our RWG VIP GGR growth forecast of +24% in 2018 and +15% in 2019. 

"For RWG mass market GGR, we maintain our expectation of it to grow in a more stable fashion at +14% p.a. from 2018-2019."

It also believes there is upside to the Singaporean VIP market, raising its VIP volume growth forecasts to 10% for 2017, and 5% for 2018 but maintaining 5% for 2019.

"While we maintain our Singapore mass market GGR growth forecast of -2% for 2017, +0% for 2018 and +5% for 2019, we do not discount the possibility that Resorts
World Sentosa (RWS) may regain market share at the expense of Marina Bay Sands (MBS) due to the recovering MYR/SGD exchange rate."

Maybank Investment Research's top pick in the sector is Genting, which it views as a cheaper proxy to Genting Malaysia and Genting Singapore. 

It has a Buy call on Genting Singapore as the counter is still below its historical mean and may monetise its non-gaming assets to bid for Japanese casino licence this year.

It has a Hold call on Genting Malaysia given its near- to medium-term valuation are above its historical mean.
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