MCO 2.0 cuts Genting’s visitorship, FY21 earnings forecast

By SHAHEERA AZNAM SHAH / Pic TMR

GENTING Malaysia Bhd will start feeling the pinch of the reinstated Movement Control Order (MCO) with Resort World Genting (RWG) expected to cease operation for a longer period.

Hong Leong Investment Bank Bhd (HLIB) analyst Low Jin Wu stated that RWG’s closure is expected to last for two months as the possibility of MCO extension is high, costing 20% drop in the premise’s visitorship.

“We foresee the visitorship for RWG is expected to remain extremely subdued even if MCO restrictions in Pahang were lifted, as the number of cases in populous states like Kuala Lumpur, Selangor, Penang and Johor is still at very high levels,” he said in a report last Friday.

The entertainment resort owner announced recently that RWG, Genting Malaysia’s main revenue source, will be temporarily closed from Jan 22 to Feb 4, in line with the government’s implementation of MCO in Pahang.
Low is expecting 20% drop in

the visitorship for the group’s operation in the UK, factoring in the lockdown measures there which were implemented in the first week of January.

“We also expect the UK’s lockdown measures to dampen its recovery in the financial year 2021 (FY21). The UK hit its highest ever daily case recorded on Jan 8, but has since tapered down to below 40,000 cases,” he said.

Due to the closure, the research house has cut its earnings forecast for Genting Malaysia by 32% for the group’s FY21.

“We cut our FY21 forecast while maintaining our FY22 forecast as we are expecting a steep V-shaped recovery to happen in FY22 due to the rollout of vaccines and better overall economic outlook, alongside a lower base effect,” he said.

Public Investment Bank Bhd revised Genting Malaysia’s earnings lower by 14% for FY21 to account for the temporary closure of operations in Malaysia and the UK.

Following the implementation of MCO in six more states, Genting Malaysia has temporarily closed RWG, Resorts World Kijal, Terengganu, and Resorts World Langkawi, Kedah, until Feb 4.

“Although its Malaysian operations will be shut for two weeks, we do not rule out the possibility of an extension of the MCO period beyond the Chinese New Year holiday, which is usually its peak period.

“Resorts World Birmingham, alongside all land-based casinos in the UK, will also be temporarily closed until further notice,” it said.

HLIB has a ‘Hold’ call on Genting Malaysia with a lower target price (TP) of RM2.27, while Public Investment has a ‘Neutral’ call on the company with a TP of RM2.20. Genting Malaysia’s shares closed last week at RM2.40.