Second half hopes for Genting

Locally, Genting Malaysia Bhd’s immediate earnings prospects are seen to be challenging from the impact of MCO 2.0 and the start of MCO 3.0 in Klang Valley last week. (File pic - Genting Highlands resort)

PETALING JAYA: The resurgence of Covid-19 cases is dampening the recovery pace in several key markets of Genting Bhd.

Analysts said that Genting’s near-term outlook is expected to be dicey, before things get better.

Group earnings are expected to be lead by Genting Singapore Ltd where expectations are that Singapore, seen as being one of the best managed countries under the current pandemic, could likely to be the first few to open its border, said Kenanga Research.

Locally, Genting Malaysia Bhd’s immediate earnings prospects are seen to be challenging from the impact of MCO 2.0 and the start of MCO 3.0 in Klang Valley last week.

Meanwhile, the US$4.3bil (RM17.5bil) Genting Las Vegas, which is scheduled for opening next month, would remain in net loss in the initial years of operations given the badly affected tourism and hospitality sector due to Covid-19.

Genting and 49.5%-owned Genting Malaysia are slated to release their first quarter results ending March 2021 (Q1FY21) later this month.

On Friday, Genting Singapore reported a 26% year-on-year (y-o-y) decline in net profit to S$34.5mil (RM106.8mil) for Q1FY21, as the impact of the pandemic continued to weigh on it’s operational performance.

Analysts note that non-gaming revenue of Genting Singapore, which is 52.7%-owned by Genting and is the operator of Resorts World Sentosa (RWS), posted a larger decline of 56% y-o-y compared to a 19% drop in gaming revenue.

This was due to the low occupancy and utilisation rates of its hotels and theme park operations given the lack of international visitors to Singapore.

But despite the risk of a slower-than-expected recovery, PublicInvest Research believes the worst is over for the Genting group as earnings are anticipated to see a pick up in second half of financial year 2021 as vaccinations would have progressed to a matured stage by then.

“We reiterate our outperform call and target price of RM5.18 for Genting, ” it said in a note to clients yesterday.

The research firm noted that Singapore’s RWS has been developing new events and promotions to attract domestic tourists.

That said, operations of its leisure & hospitality segment should continue to run below optimal rate in FY21 as international borders are likely to remain restricted in the near-term until herd immunity is achieved, possibly in early 2022.

Nevertheless, it is of the view that a complete lockdown of economies is unlikely to recur in the future given the rollout of vaccination programmes globally.

Kenanga Research expects a better second half of financial year 2021 and recovery to pre-pandemic level only in 2022 for Genting Singapore.

This is based on expectations that Singapore, seen as one of the best managed countries under current pandemic, is likely to be the first few to open its border.

“Thus, Genting Singapore is expected to lead Genting’s near-term earnings.

“For now, pending the release of the group’s Q1FY21 results later this month-end, we are keeping our outperform call at target price of RM5.93 (which is a five-year mean discount of 42.7% to its sum-of-parts valuation) and estimates unchanged, ” it said in a report.

Risk to its call on Genting is a prolonged Covid-19 pandemic continuing to restrict traveling and hence affecting the group’s casino operations.

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Genting , earnings , prospects , Genting Singapore , MCO ,


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