Genting Malaysia’s flagship home grown integrated resort, Resorts World Genting (RWG), is poised to exceed pre-pandemic visitation levels in 2023, buoyed by the reopening of all hotel inventory and addition of new theme park attractions, according to Hong Leong Investment Bank (HLIB) Research.
In a note, the brokerage said it also expects RWG to be one of the key beneficiaries of Malaysia’s new government which has pegged tourism as an opportunity to boost the economy.
“Under the new administration, the tourism segment may benefit as the government capitalises on the sector as a lever to support the domestic currency and economy,” HLIB analysts wrote.
“We believe that visitations to RWG have the potential to scale beyond pre-pandemic level given the capacity increase and the more diverse crowd it attracts due to the addition of its theme park.”
The positive outlook comes despite Genting Malaysia’s 3Q22 financial results falling below expectations – the company reported a net loss of MYR8.2 million (US$1.82 million) – and predictions that Q4 could also be subdued at RWG due to the impact of the football World Cup.
“Looking ahead, we believe the group will see a much better FY23 due to the reopening of the 21% remaining hotel room inventory in RWG and SkyWorld capacity increase with two additional rides, to bring a total of 20 rides,” HLIB said.
The brokerage also expressed a more positive view on Genting Malaysia’s investment into US casino operator Empire Resorts, owner of Resorts World Catskills, which this week confirmed its third New York casino, Resorts World Hudson Valley, will open on 28 December.
The 2019 Empire Resorts acquisition had seen Genting Malaysia’s share price plummet, “However, on hindsight, we are now starting to appreciate the value behind the acquisition,” the analysts wrote.
“Despite the Covid-19 pandemic, Empire’s operational performance had improved with gross gambling revenue, or GGR, exceeding pre-pandemic levels for most of the months since May 2021.
“The opening of RWHV is expected to contribute positively to Empire’s earnings in the coming quarters given that it’s a low capital expenditure venture resulting in only marginal incremental depreciation expense post opening.”
HLIB has maintained a “BUY” rating on Genting Malaysia.
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