GGRAsia – Brokerage cuts Gen Malaysia 2022 profit forecast by 52pct

Brokerage cuts Gen Malaysia 2022 profit forecast by 52pct

Jul 20, 2022 Newsdesk Latest News, Rest of Asia, Top of the deck

Banking group CGS-CIMB has revised downward by 51.5 percent its previous estimate that casino group Genting Malaysia Bhd could generate MYR899 million (US$201.9 million) in net profit this year. The institution now expects the casino firm to have MYR436 million net profit for 2022.

The revised figure includes an anticipated MYR57-million negative figure under the “investments and others” heading, as opposed to a previous positive figure of MYR18 million in that category in its prior estimate for 2022.

CGS-CIMB said post Covid-19 recovery for the casino group’s flagship property, Resorts World Genting (pictured), near the Malaysian capital, Kuala Lumpur, had been “somewhat held back by staff shortages”.

It lowered by 17.6 percent its forecast for group wide 2022 revenue, from nearly MYR10.50 billion, to just under MYR8.65 billion. Genting Malaysia also has casino business in the United States and the Bahamas, and the United Kingdom and Egypt.

For Resorts World Genting specifically, CGS-CIMB forecasts 2022 revenue to be just under MYR5.36 billion; down 21.1 percent on its prior estimate.

“Despite strong demand, Resorts World Genting only operated 5,500 hotel rooms – out of a total of 10,500 – in mid-May, though this is up from 5,200 at the end of March,” with the number having “likely improved further to circa 6,000 in June,” wrote analysts Foong Choong Chen and Sherman Lam Hsien Jin in a recent note.

“Resorts World Genting is in the process of hiring more staff and plans to open more rooms over the next six months,” they added.

The analysts also observed that visitors from China, which they said made up as much as 7 percent of total hotel guests at the property in pre-pandemic trading in 2019, had “also not yet returned as its borders remain closed”.

While travel out of and into China is possible, the country’s immigration authorities have been warning citizens against non-essential travel as the nation seeks to maintain a “zero Covid” strategy.

Regarding Resorts World Genting’s new MYR3.3-billion outdoor theme park, Genting SkyWorlds, the brokerage said that ramp-up had not been as swift as might have been hoped, with some “technical issues” reported by consumers regarding some rides. The facility had a “soft” opening in early February.

“Ticket sales have gradually improved from 2,600 per day in the first 52 days – 8 February till end-March – to circa 3,000 per day in April to May, with further increases in June, we gather,” said the CGS-CIMB team.

But they added: “Online checks show mixed feedback, with visitor complaints mostly about the intermittent closure of some rides due to technical issues.”

“While we believe these are teething issues, ticket sales growth may be constrained until the operational kinks are ironed out,” the analysts added.

In a recent investor presentation, Genting Malaysia said Genting SkyWorlds was a key element in its post-Covid-19 ramp up, adding it was working to maximise yield from all the facilities at its flagship gaming complex by making better use of its consumer database, and via targeted marketing.