Maybank IB said valuations remained attractive for gaming stocks.
PETALING JAYA: Domestic gaming stocks, comprising casino operators and number forecast operators (NFOs), should ride through 2025 in an operating environment that is just marginally better, with major catalysts being casino licences in Thailand and the United States.
Maybank Investment Bank Research (Maybank IB), which is positive on the overall sector, said in a report that while valuations remained attractive for gaming stocks, it expects earnings growth for Genting Malaysia Bhd
, the operator of the Resorts World brand of integrated casinos and resorts, to be “pedestrian” as visitor arrivals had already recovered to 95% of pre-Covid-19 levels.
A key catalyst for Genting Malaysia would be getting a casino licence for Resorts World New York City (RWNYC), with the result of a bidding process to be announced by end-2025.
The research house cautioned that Genting Malaysia’s chances of securing a full casino licence also depends on the outcome of a complaint made against parent company Genting Bhd by the Nevada Gaming Control Board as well as a lawsuit by RAV Bahamas Ltd.
RWNYC has budgeted US$5bil for expansion if a full licence is granted.
The research house does not expect VIP-customer volume for Resorts World Sentosa (RWS), operated by Genting’s listed subsidiary, Genting Singapore PLC, to recover meaningfully on lower visitor numbers from China, due to the uncertain economic outlook there, but expects mass-market share to recover when the Hard Rock Hotel located in RWS reopens in the first quarter of 2025.
“Over the long term, Genting Singapore will add another 700 or 30% more rooms as part of its S$6.8bil RWS 2.0 reinvestment plan. Furthermore, Genting Singapore could try and expand into Thailand should the latter choose to issue request for proposals and call for bids in 2025 for integrated resorts.
“To expand into Thailand, Genting Singapore plans a joint venture with a Thai property developer,” the research house added.
Besides potential expansion of casino operations, Maybank IB Research said support could come from more foreign tourists in the run-up to Visit Malaysia Year 2026.
“Tourism Malaysia hopes to attract 31.4 million tourists in 2026, compared with the estimate of 27.3 million for this year. We notice that tourist arrivals to Malaysia begin to rise in the years preceding Visit Malaysia Years. This could be positive for Genting Malaysia’s Resorts World Genting where foreign tourists account for 15% of visitor arrivals,” it said.
For the NFOs, the research house does not expect sales or draws to recover much more from the 80% to 95% range achieved compared with pre-pandemic levels.
Even the High Court’s decision overturning the Kedah government’s ban on NFO operations in the state would not be meaningful should Sports Toto Bhd and Magnum 4D Bhd, the domestic NFO operators, decide to reopen all their outlets in the state.
The key issue for the NFO operators would be whether social media platforms with more than eight million users have to register with the Malaysian Communications and Multimedia Commission by Jan 1, 2025 as this will mean a clampdown on illegal NFOs that have been using social medial platforms. This could be positive for NFOs.
“Magnum has the added catalyst should 8%-owned U Mobile lists and its shares are distributed to Magnum shareholders,” the research house said.
