Genting poised for a comeback, says HLIB

KUALA LUMPUR: Genting Bhd is poised for sustained recovery momentum, bolstered by various factors contributing to the optimistic outlook, says Hong Leong Investment Bank (HLIB) research.

HLIB said the group stands to benefit from the ongoing rebound in foreign visitations at Resorts World Genting (RWG) and Resorts World Sentosa (RWS), driven by the increasing frequency of global flights, particularly outbound flights from China, and the visa-free travel arrangements between China, Malaysia, and Singapore. 

  Additionally, RWS is expected to receive spillover benefits from a series of prominent music concerts scheduled in Singapore in late 2023 and 2024.

  Moreover, the performance of Resorts World Las Vegas (RWLV) is projected to be supported by the growth in convention visitations and major events in Las Vegas, according to HLIB's note. 

  HLIB maintained its 'buy' rating on the gaming group with a revised target price of RM7.12 (up from RM6.96 previously), based on a 45 per cent discount on its SOP-derived value of RM12.94, considering forecast changes to Genting Malaysia Bhd (GentingM), Genting Singapore (GentingS), and Genting Plantations Bhd (GentingP).

  Genting reported a core profit after tax and minority interest (Patami) of RM414.3 million for the fourth quarter of 2023 (4Q2023(, which was -35.5 per cent quarter-on-quarter, and -5.5 per cent year-on-year, bringing FY2023's core Patami to RM1.58 billion (+2.3x year-on-year).

  HLIB noted that the performance exceeded both house (108 per cent) and consensus (+129 per cent) estimates.

  Over the full year, Genting's performance continued to benefit from the overall increase in business volumes as international travel gradually recovered. 

  HLIB adjusted its FY24–25 forecasts upwards by 3.0 percent to 6.0 percent, raising its revenue assumption and projecting a narrower loss from its joint venture and associate. 

GentingM said in a recent stock exchange filing that it remained cautious of the near-term prospects of the leisure and hospitality industry but is positive in the longer term.

  In Malaysia, the expected growth in regional tourism and domestic private consumption augurs well for the group's strategy of increasing visitation and customer spending at RWG.

  It said that continued investments in infrastructure enhancements at Genting Highlands will be made to ensure the safety of visitors and the surrounding community.


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