PETALING JAYA: Genting Malaysia Bhd
’s recent earnings have come in below expectations for most research houses.
Its core net profit of RM10mil accounted for 2% of Phillip Capital Research’s full-year forecast.
The negative variance was due to higher- than-expected operating expenses.
Its revenue, however, increased 11% year-on-year (y-o-y) to RM2.9bil, driven by broad-based leisure and hospitality growth across all key markets, including Malaysia (plus 3%), the United Kingdom (plus 11%), and the United States and Bahamas (plus 39%).
The multinational hospitality group saw its earnings before interest, taxes, depreciation, and amortisation (Ebitda) contract by five points yearly to 22%, weighed down by elevated payroll and operating costs following revised union agreements and minimum wage adjustments, as well as ramp-up costs associated with Resorts World New York City’s (RWNYC) transition into a full-scale commercial casino.
“Higher finance costs, depreciation charges and the effective tax rate resulted in a sharp decline in core net profit,” Phillip Capital noted.
Moreover, Genting Malaysia’s management expects tensions in the Middle East to continue weighing on the UK gaming performance and delay margin recovery.
Philip Capital said it will maintain a “hold” call on the stock with a lower target price (TP) of RM2.15 from RM2.35 previously, while trimming its financial year 2026 (FY26) to FY28 earnings forecasts by 9% to 19% to account for lower operating margin assumption.
“We continue to see Genting Malaysia as one of the main beneficiaries of Visit Malaysia 2026 and see long-term potential from the new downstate RWNYC casino expansion.”
Meanwhile, CIMB Research will cut Genting Malaysia’s FY26, FY27 and FY28 core earnings per share (EPS) estimates by 49%, 14% and 11% respectively.
The research house said it forecast core EPS to fall 50% y-o-y in FY26, largely dragged by ramp-up costs and higher interest expense on debt raised by RWNYC to pay for the upfront licence fee and capital expenditure (capex) for the initial phase.
“Contributions from new table games are unlikely to be sufficient to offset the impact, given the eight-month operating period and RWNYC starting with only 250 tables out of a total of 800,” it noted.
In the United Kingdom and Egypt, first-quarter 2026 (1Q26) Ebitda dropped 8% y-o-y. The decline was mainly driven by higher national minimum wages and National Health Service-related costs, which were partly cushioned by contributions from the newly acquired Stratford casino.
CIMB Research said it will maintain a “buy” call on the stock with a TP of RM2.50.
On a valuation perspective, Genting Malaysia’s FY27 Ebitda of 7.2 times is at a 23% discount to the 10-year mean.
TA Research also cut its FY26 to FY28 projections by 21%, 14% and 15% respectively after revising staff and finance costs higher. It added that all operating gaming units posted lower revenue and earnings.
However, 1Q26 non-VIP wins surged 5% while the VIP wins declined by 1% y-o-y, making up the overall 2.9% increase in revenue for Malaysia operations.
TA Research noted that the higher non-VIP gaming revenue also cushioned the drop in contribution from the non-gaming segment.
“For this quarter, total visitations to Genting Highlands were down 4% on a yearly basis at 5.5 million. Hotel occupancy slipped to 94%, offset by a higher average room rate. Foreign guests increased 4% y-o-y, and took up 32% of rooms available for sale,” the research house said.
Nevertheless, US$1bil has been earmarked for capex this year.
“Overall, we concur with management that this brownfield expansion would gain the first-mover advantage.
“On top of that, the opening is timely to capture the spillover effect from the FIFA World Cup event.”
TA Research noted that it will downgrade Genting Malaysia’s valuation to RM2.29 with an unchanged capital asset pricing model of 10.2%, and maintain a “buy” call on the stock.
