Optimistic outlook for Genting on tourism revival

HLIB Research said Genting’s current valuation has yet to fully reflect the recovery potential of Genting Singapore Plc and GenM, as well as the growth prospects of Resorts World Las Vegas.

PETALING JAYA: While the FBM KLCI kicked off 2024 on a positive note, advancing 2.8% year-to-date (y-t-d), buoyed by an influx of foreign buying, Genting Bhd posted a comparatively modest y-t-d return of 6%, trailing behind Genting Malaysia Bhd’s (GenM) 6.6%.

Illustrating this scenario, Hong Leong Investment Bank (HLIB) Research reckoned that Genting’s current valuation has yet to fully reflect the recovery potential of both Genting Singapore Plc (GenS) and GenM, alongside the growth prospects of Resorts World Las Vegas.

Additionally, the research house said it’s worth noting that Genting currently traded at a 16% discount to the value of its stake in GenS.

Genting’s market capitalisation has historically traded at an average premium of 43% (as opposed to the current discount of 17%) relative to its effective stake in GenS over the past 10 years.

Separately, HLIB Research in its first-half 2024 strategy report highlighted the ongoing recovery in tourist arrivals to Malaysia as a key theme for 2024.

Genting stands out as a key proxy, given its strategic holdings in GenM (49.3%) and GenS (52.6%), positioning the group to leverage the recovery momentum of both entities.

“Our optimism is rooted by the anticipation of a sustained rebound in foreign tourist arrivals to both Malaysia and Singapore, driven by the visa-free travel deal between China and the two nations, which is expected to bolster GenM and GenS’ FY24 earnings,” it noted.