Earnings recovery seen for Genting in 1Q

Easing of movement restrictions to augur well

PETALING JAYA: Going by Genting Singapore Ltd’s results for the first quarter of financial year 2022 (1Q22), the Genting group of companies is poised to see a recovery in earnings following the removal of pandemic-related constraints.

Genting Singapore, which is 52.7%-owned by Bursa Malaysia-listed Genting Bhd, reported a core profit of S$43.5mil (RM137.19mil) in 1Q22 from S$12mil (RM37.85mil) in the preceding quarter.

Kenanga Research said the results were within expectations and stronger forward earnings are anticipated following the island-state reopening its international borders to fully vaccinated travellers from April 1.

“We believe the two years of lacklustre earnings at Genting Singapore are likely to end with earnings recovery expected from 2Q22, given the reopening of international borders. And the same would apply to Genting Malaysia Bhd as well, which should eventually benefit parent-company Genting,” it said in a report.

Genting and its 49.%-owned Genting Malaysia are slated to release their 1Q22 results this month-end.

Similarly, since the reopening of Malaysia’s borders, UOB Kay Hian (UOBKH) Research noted that anecdotes pointed to a meaningful influx of international visitorship to the country and Resorts World Genting (RWG). This is expected to boost the Genting group’s earnings recovery from 2Q22 onwards.

“Both Genting and Genting Malaysia’s 1Q22 results are likely to see sequential earnings recoveries with RWG’s gross gaming revenue (GGR) returning to 70% to 75% of 2019’s level,” it added in a May 10 report on the gaming sector.

GGR for 4Q21 stood at about 60%.

The increase, according to the research firm, reflected the “tremendous pent-up demand from local patronage during festive seasons, coupled with the gradual return of foreign patronage”.

It also noted recoveries in the group’s overseas operations, particularly in the United States where gaming revenues have surpassed pre-pandemic levels.

A key rerating catalyst for Genting Malaysia, it added, would be the bid for the New York downstate gaming concession, where it is seen as a strong contender.

Meanwhile, associate Empire Resorts Inc is expected to deliver a healthy earnings before interest, taxes, depreciation and amortisation growth in 2022, driven by the recently-secured online sports betting licence and the opening of Resorts World Hudson Valley.

On the recent 25-basis-point hike in the overnight policy rate or OPR to 2%, CGS-CIMB Research said the impact would be minimal on the gaming companies’ core earnings per share, as most or all of their debts are on fixed interest rates.