KUALA LUMPUR: Genting Malaysia Bhd
's FY19 earnings are expected to fall 25% year-on-year on the higher RWG casino duty rates, said Maybank Investment Bank research.
Meanwhile Genting Singapore Ltd earnings are expected to be more stable while Genting Bhd is expected to grow at a three-year forward CAGR of 8%.
"We maintain our GENM TP at MYR3.30, trim our GENS TP by 2% to SGD1.26 and raise our GENT TP by 6% to MYR9.50. Maintain BUY calls on GENT and GENS; HOLD on GENM," said the research house.
In a research note, Maybank IB said Resorts World Genting's (RWG) EBITDA surged 42% year-on-year but its casino duty rates were hiked 10ppts effective Jan 1, 2019.
"While we maintain our 2019 RWG VIP gross gaming revenue (GGR)/mass market GGR growth forecasts of +10%/+10%, we fear downside risk if GENM cuts RWG’s junket commission and direct VIP rebate rates to moderate the impact of the casino duty rate hikes.
"Similarly, we maintain our 2020 RWG VIP GGR/mass market GGR growth forecasts of +15%/+14% but fear downside risk if GENM is unable to open the RWG outdoor theme park by our forecasted 1Q20."
With regards to the Singapore VIP GGR, Maybank IB said Singaporean integrated reports are not subject to a smoking ban as in Macau and they can ease their tight credit policies to VIPs to generate more volume.
"Thus, we maintain our 2019/2020 Singapore VIP GGR growth forecast of +5%/+5%. Thanks to non-recurrence of the FIFA World Cup and recovering Singaporean consumer sentiment, we also maintain our 2019/2020 Singapore mass market GGR growth forecast of +5%/+5%," it said.
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