Global financial services group Nomura has raised its earnings estimates for Genting Malaysia and reiterated its “Buy” rating, citing continued growth in overseas visitor arrivals, including from China.
In a Tuesday note, Nomura analysts Tushar Mohata and Alpa Aggarwal said they have raised their revenue estimates for Resorts World Genting, located outside Kuala Lumpur in the Genting Highlands, by 6% to MYR6.6 billion (US$1.5 billion) in 2023 and by 13% to MYR7.7 billion (US$1.75 billion) in 2024.
This is on the back of a likely higher visitor count of 26.4 million this year and 28.8 million next, compared with 22 million in 2022 – aided by RWG bringing more hotel rooms online post-COVID.
The analysts also expect improving visitation to RWG’s theme park, SkyWorlds, after two months of heavy rain in January and February “dampened some visitation in the first two months of 1Q23, in what is usually a seasonally strong quarter.
“That said, school holidays and drier weather in March should help overall performance for the quarter,” they wrote.
Group-wide, Mohata and Aggarwal the potential sale of Genting Malaysia’s land parcel in Miami, Florida could prove a “windfall” for the company’s bottom line and provide an opportunity to submit a powerful bid for a downtown New York casino license.
According to a report by Bloomberg late last week, Genting is said to have received five bids for the land with one coming in at just under US$1.5 billion. Genting Malaysia originally purchased the land for US$236 million in 2011.
“Should Genting Malaysia be successful in selling at close to US$1.5 billion, this would generate a large windfall for the company, and also would result in a MYR5.5 billion (US$1.25 billion) gain on disposal,” Nomura wrote.
“This will also help improve the balance sheet of Genting Malaysia after years of capex, a COVID-19-related slowdown, and generous dividends, which has resulted in net debt to equity rising from 19% as of end-2019 to 71% as of end-2022.
“We believe the cash proceeds are likely to be retained within the company for the time being, to help fund the downstate New York gaming license, should Genting Malaysia be successful in the bidding process.”
In revising their 2023 and 2024 estimates, the analysts noted that revenues at Genting Malaysia’s US and UK operations are expected to rise narrowly, helping drive the company’s recovery trajectory.
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