Reopened Malaysia IR aiding Genting rebound says Nomura

Sep 17, 2020 Newsdesk Latest News, Rest of Asia, Top of the deck  

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Resorts World Genting, Malaysia’s integrated resort (IR) with the country’s only licensed casino, is aiding Genting Malaysia Bhd’s rebound, and might see that firm make a recovery in earnings before interest, taxation, depreciation and amortisation (EBITDA) by as early as the fourth quarter. That is according to commentary in a Nomura research report on Malaysia equities, issued on Thursday.

Bursa Malaysia-listed Genting Malaysia, which also has overseas casinos, recorded negative adjusted EBITDA by MYR486.2 million (US$117.5 million) in its loss-making second-quarter results, published last month.

But Resorts World Genting, in an upland area outside the capital Kuala Lumpur, had seen “encouraging” numbers of visitors since it reopened in June, reiterated Nomura.

The complex had reopened on June 19, after being shuttered since March 18, as part of that nation’s measures against Covid-19.

The property (pictured) was receiving “40,000 visitors per day now,” and had “90 percent hotel occupancy,” based in the “approximately 50 percent” room inventory currently open, noted Nomura.

According to the latest information on the resort’s website, the gaming areas SkyCasino and Genting Club, are still only open to Genting Rewards members. The venue adds that such players are only able to gamble with what it termed “e-cash”, rather than paper money. Players do so by charging in advance their rewards card with cash value.

Aside from the mandatory use of a face mask, guests are now required to use a Covid-19 contact-tracing application before entering Resorts World Genting.

Nomura nonetheless said in its Thursday commentary, that Resorts World Genting benefitted from “low dependence on foreign clientele”.

Last month, Malaysia’s tourism minister was quoted saying the country might not open its borders to foreign tourists until next year, due to the pandemic. Earlier this week, Malaysia’s Prime Minister said the country might have to retighten community-movement restrictions if the tally of fresh Covid-19 cases rises more acutely.

The Nomura report authors stated: “We expect Resorts World Genting to stage a gradual recovery over the coming quarters, with a sharp inflection come financial-year 2022, with the opening of the theme park.” The latter was a reference to a long-awaited outdoor theme park, anticipated to draw further crowds to the resort.

Nomura observed on Thursday that the “official timeline” for the theme park was “mid-2021,” but was “prone to slippages”.

The institution said in further commentary, referring to Genting Malaysia gaming at home and overseas: “All of Genting Malaysia’s major casinos are now operational again, as [Resorts World] Catskills and [Resorts World Casino] New York City, reopened on 9 September.”

Genting Malaysia “should” see a “turnaround” in terms of EBITDA “from the fourth-quarter results season” this year.

Nomura said however that Genting Malaysia’s stock was “likely to face overhang” from the Empire Resorts [Inc] recapitalisation”, in the U.S., announced recently. But the institution said the likelihood of struggling Genting Hong Kong Ltd, a Genting group unit that runs casino cruise ships, requiring a “bailout”, was “lower now” than previously.

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