Maybank IB keeps 'BUY' call on genting

KUALA LUMPUR: Maybank Investment Bank (Maybank IB) has projected a decrease in gross gaming revenue (GGR) from the mass market category for Genting Bhd's fiscal year 2024 (FY24).

The temporary shutdown of the Hollywood mega gaming floors and Circus Palace for renovations is the reason for this estimate.

As a result, Genting's FY24 earnings were lowered by 15 per cent by the investment bank.

However, Maybank IB noted that they would modify their FY24 forecast, anticipating a 19 per cent decline in the projected mass market revenue, if the Hollywood and Circus Palace mass gaming floors were to reopen nine months after Feb 28, 2024, and if 50 per cent of their mass market revenue moved to the Sky Casino.

"We maintain our earnings estimates for fiscal years 2025 and 2026, assuming that total revenue for the Resort World Group (RWG) will recover to 104 per cent and 106 per cent respectively, of the levels seen in fiscal year 2019 (FY19).

"Historical data indicates that Resort World Genting's (RWG) revenue typically increases after expanding or renovating gaming floors," it added.

Maybank IB reported that Genting indicated they cannot specify when the Circus Palace and Hollywood mass gaming floors will reopen.

"Nevertheless, we anticipate that they will reopen by the end of the year to take advantage of the holiday season," said Maybank IB.

In addition, the investment bank noted that the increased attendance at Sky Casino on a weekday morning is likely due to previous patrons of Circus Palace and Hollywood mass gaming floors now choosing to visit Sky Casino instead.

"We also observed some Chinese tourists actively participating in gaming, as indicated by occasional Mainland Chinese accents.

"Additionally, we observed the removal of 'NO SMOKING' signs at tables, a change we interpret as favourable for table revenue, it added.

Maybank Investment Bank retains its 'Buy' recommendation on Genting but adjusts the target price downward to RM3.16 from RM3.26.

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