GGRAsia – Genting Malaysian ops hampered by Covid wave: analysts

Genting Malaysian ops hampered by Covid wave: analysts

May 31, 2021 Newsdesk Latest News, Rest of Asia, Top of the deck

Brokerage Nomura says it is lowering by 17 percent its 2021 revenue estimates for casino operator Genting Malaysia Bhd, due to additional restrictions to stem the further spread of Covid-19 in Malaysia. The institution now expects Genting Malaysia to report full-year revenue of nearly MYR5.25 billion (US$1.26 billion), down from a previous forecast of MYR6.32 billion.

Nomura also said it expected the casino firm to post a net loss of MYR651 million in 2021, higher than the MYR184-million loss it had predicted earlier. It also reduced the adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) forecast for Genting Malaysia by 33 percent for full-2021, to MYR844 million.

Genting Malaysia is the operator of the Resorts World Genting casino resort (pictured) near Kuala Lumpur. The company reported this month a first-quarter net loss of MYR483.6 million, with revenue down 68.1 percent year-on-year, to just under MYR623.4 million.

The company also has casino operations in the United Kingdom and Egypt; and in the United States and the Bahamas.

Last week, the group again “temporarily closed” its casino at Resorts World Genting until further notice, because of a new so-called movement control order imposed by the country’s government as a Covid-19 countermeasure.

Nomura analysts Tushar Mohata and Alpa Aggarwal said in a memo issued last week that given the “current alarming situation of the Covid-19 curve” in Malaysia, and a “slow pace of vaccination” in that country, Genting Malaysia’s domestic operations “might remain depressed for at least another one to three months.”

“Further complicating matters is the government’s recent order to close the casino [at Resorts World Genting] till further notice, with no clarity on what Covid case threshold it needs to see to allow a reopening.”

Meanwhile, the Malaysian government announced on Friday a two-week nationwide lockdown to curb a recent surge in Covid-19 infections in the country. The government stated that most businesses would be shut from June 1, except for essential economic and service sectors.

The country’s return to a hard lockdown comes in the wake of record daily infection numbers that saw cases top 9,000 on Saturday, according to local health authorities.

In its memo, the Nomura team said it believed equity investors would “likely overlook near-term bumpy earnings” for Genting Malaysia, as they are “looking through” to fiscal-years 2022 and 2023. The firm’s prospects “look robust” post-2021, with the Genting SkyWorlds outdoor theme park “scheduled to open (official guidance: third-quarter 2021 now), vaccine availability in key markets, and start of some inbound tourism,” stated the analysts.

The casino group said last week that it was “working towards” the completion “in the third quarter of 2021” of the new theme park at Resorts World Genting.