Maybank Investment Bank Bhd says it now expects Genting Malaysia Bhd to record a core net loss for 2021, “due to the recent surge in new Covid-19 cases” in Malaysia, where the gaming firm runs its main earner, the Resorts World Genting casino complex (pictured) near Kuala Lumpur.
The brokerage said it was now forecasting Genting Malaysia’s “full-year core net loss” at MYR384.8 million (US$93.5 million), compared to a 2020 core net profit of MYR137.9 million, wrote analyst Samuel Yin Shao Yang, in comments accompanying a Tuesday note.
Resorts World Genting resumed operations on February 16, after being closed for more than three weeks as a Covid-19 countermeasure, due to a spike in infections in that country.
As of noon on Tuesday, Malaysia had recorded 2,341 new cases of Covid-19, taking the national tally since the start of the crisis, to 379,473, according to data from the country’s Ministry of Health.
Various restrictions on inbound travel to Malaysia by non-nationals have been imposed at various times since the advent of the pandemic.
Despite now forecasting a loss for 2021, Maybank said it still believed that Genting Malaysia’s “earnings-recovery momentum is intact.”
Maybank noted that despite the ongoing pandemic within the country, an important catalyst for Genting Malaysia’s earnings in 2022 will be the opening – due in mid-year this year – of Resorts World Genting’s new outdoor theme park, to be called Genting SkyWorlds.
The institution forecasts Genting Malaysia’s full-year 2022 earnings before interest, taxation, depreciation and amortisation “to grow by 131 percent year-on-year,” as the theme park “ramps up” its business.
Maybank says another possible catalyst for Genting Malaysia is that promissory notes issued on a stalled tribal-gaming casino resort project in the United States – declared by Genting Malaysia in 2018 as an impairment – might be restored to the balance sheet.
“We gather that the Mashpee Wampanoag promissory notes may be written back. This will boost net profit by circa MYR200 million,” wrote Mr Yin, referring to financial year 2022.
The analyst further noted, referring to a Genting Malaysia operation in the United States: “We believe that Resorts World New York City is well positioned to be awarded a lucrative downstate commercial casino licence.”
This could eventually boost group net profit “by circa MYR600 million,” wrote Mr Yin.
The analyst also referred to an associated U.S. business, Empire Resorts Inc, which runs Resorts World Catskills, a casino complex in upstate New York, and which has been receiving financial support from the Genting group of businesses and the founding dynasty, the Lim family.
“We opine that 49 percent-owned Empire Resorts will be less burdensome going forward,” said the analyst. “We don’t think Genting Malaysia will acquire the remaining 51 percent of Empire wholesale.”
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