Worst is over for Genting

PETALING JAYA: The worst is over for Genting Malaysia Bhd as recovery continues to take place amid increasing vaccinations and the gradual return to normalcy.

RHB Research, in a report to its clients, said that its team recently visited Resorts World Genting (RWG) and “were encouraged by the crowd.”

“While visitor levels have yet to reach the pre-pandemic levels, it should improve going forward as higher vaccination rates will hasten the return to normalcy.

“The imminent opening of Genting SkyWorlds could be a crowd-puller for other RWG facilities, potentially leading to higher-than-expected visitor arrivals, “ the research house said.

RHB Research, however, is not making any changes to its earnings estimates for Genting Malaysia for now, but is maintaining a “buy” recommendation on the stock.

This is given that the group is a prime beneficiary of economic reopening and rebound in domestic tourism activities, said the research house.

“We believe the trajectory for earnings will reach an inflection point and the imminent opening of Genting SkyWorlds will also create excitement, aside from the novelty effect – potentially leading to higher-than-expected visitor arrivals to RWG, “ said RHB Research.

It also noted that at the time of its visit, the much anticipated outdoor theme park had yet to open.

“We understand that the theme park is ready to commence operations soon and believe it could happen in November, which will be timely to capture the pent-up demand in the run up to the year-end holidays, “ it said.

The theme park is on 26 acres, with nine themed worlds and there are 26 family-friendly rides and attractions.

Some of the themes are Ice Age, Night at the Museum, Independence Day, Rio and Epic.

In terms of valuations, the group’s stock is inexpensive at eight times FY22 enterprise value/earnings before interest, tax, depreciation and amortisation compared with regional peer average of around 12 times, it said.

“Besides, further upside could stem from the potential New York mobile sports betting licence win from its associate, Empire Resorts,” RHB Research added.

In an earlier report this month, analysts said they expected Genting Malaysia to finally break even in the final quarter of this year, following six consecutive quarters of core net losses due mostly to business disruptions caused by Covid-19.

The reopening of RWG on Sept 30, which was a month earlier than expected, will drive earnings recovery for Genting Malaysia, said Maybank Investment Bank.