,In describing the prospects for GenM, Maybank Investment Bank Research (Maybank IB) said the company’s recovery is delayed, but not denied. Citing the recent surge in Covid-19 cases in the country, the brokerage said it expected a delay in the reopening of GenM’s Resorts World Genting (RWG) to November 2021.
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PETALING JAYA: The progress of Covid-19 vaccination in Malaysia is expected to reinforce optimism in the recovery prospects of Genting Malaysia Bhd (GenM).
This proposition is based on overseas observations, which suggest that the gaming sector could recover very fast when operations resume once herd immunity is achieved.
The same will likely happen in Malaysia, which is on track to achieve herd immunity by October this year.
So, while GenM’s operations in Malaysia have been disrupted in recent months because of the national lockdown, the resorts and casino company is expected to bounce back quickly once its operations resume.
In describing the prospects for GenM, Maybank Investment Bank Research (Maybank IB) said the company’s recovery is delayed, but not denied.
Citing the recent surge in Covid-19 cases in the country, the brokerage said it expected a delay in the reopening of GenM’s Resorts World Genting (RWG) to November 2021.
The brokerage had initially predicted a resumption of RWG operations at end-August after being shut for the third time on May 31 (casinos were shut on May 24).
Maybank IB said its new timeline for the reopening of RWG coincided with expectations that the country would achieve herd immunity in October.
It maintained its view that Genting Skyworld would open in December to coincide with the school holidays.
“Our investment thesis of Covid-19 vaccination-led recovery remains intact as Malaysia is expected to achieve herd immunity by October 2021, as vaccinations have surged to above 400,000 per day,” the brokerage wrote in its report.
Maybank IB maintained its “buy” on GenM, with a lower target price of RM3.32, compared with RM3.38 previously.
Looking at the experience in the United States, where 50% of its population has been fully vaccinated, Maybank IB noted that Las Vegas Strip’s gross gaming revenue (GGR) had hit pre-Covid-19 levels since April 2021.
It added that May 2021 Las Vegas Strip GGR even exceeded the May 2019 figure by 27%.
GenM will be announcing its financial results for the second quarter of its financial year ending Dec 31, 2021 (FY21) next week.
Maybank IB said GenM’s core net loss could widen in FY21 based on the assumption of a delay in the reopening of RWG.
“We cut FY21 RWG visitor arrivals to five million from 8.5 million and widen FY21 estimated core net loss (for GenM) by 52%,” it said.
However, it kept its core net profit forecast for FY22 and FY23 based on unchanged forecast of RWG visitor arrivals at 24.2 million for FY22 and 26.2 million for FY23.