The imminent opening of the Genting SkyWorlds could be a crowd-puller for other RWG facilities
by S BIRRUNTHA / pic source: Genting SkyWorlds’ FB
GENTING Malaysia Bhd looks set to enjoy stronger earnings recovery as confidence rises among travellers due to the country’s high vaccination rate and decline in Covid-19 cases.
RHB Investment Bank Bhd (RHB Research) analysts Loo Tungwye and Lee Meng Horng have thus maintained a ‘Buy’ recommendation on Genting with a target price of RM3.58.
Following a recent visit to Resorts World Genting (RWG), the analysts noted that they were encouraged by the size of the crowd after having witnessed decent footfall at the SkyAvenue mall.
“While visitorship has yet to reach pre-pandemic levels, it should improve going forward as higher vaccination rates will hasten the return to normalcy.
“The imminent opening of the Genting SkyWorlds could be a crowd-puller for other RWG facilities, potentially leading to higher-than-expected visitor arrivals,” they noted in a research note yesterday.
The analysts highlighted that many cars were seen driving up to the hilltop resort centre while there were long queues at the cable car area and some food and beverage outlets at SkyAvenue.
“The Skytropolis Indoor Theme Park was not open at the time of our visit as management is gradually ramping up operations towards the end of the year.
“Once the indoor theme park reopens, it will attract more patrons to visit RWG, boosting its non-gaming revenue,” they added.
The analysts have not made any changes to earnings estimates despite the stock being a prime beneficiary of economic reopening and rebound in domestic tourism activities.
They noted that the trajectory of Genting earnings is reaching an inflection point and the imminent opening of Genting SkyWorlds.
They added that the company’s valuation is inexpensive at eight times FY22F enterprise value/Ebitda, compared to regional peers’ average of about 12 times.
The analysts stated that there could be further upside from the potential New York mobile sports betting licence win by its associate, Empire Resorts Inc.
Among the key risks for Genting’s include a slowdown in the Covid-19 recovery, change in luck factor and regulatory risks.
The analysts wrote that the new theme park at Genting is ready to commence operations anytime soon and believe it could happen in November, which will be timely to capture the pent-up demand post reopening of cross-state border travel and in the run-up to the year-end holidays.
“The theme park is situated on 26 acres (10.5ha) of land, with nine themed worlds in it — there are 26 family-friendly rides and attractions. Some of the themes include Ice Age, Night at the Museum, Independence Day, Rio, Epic, etc,” they said.
The analysts added that there was a long queue outside of SkyCasino guest service counter as many were applying for new membership due to pent-up demand.
Currently, only Genting Rewards members are allowed on the casino floor and the group is now accepting new membership applications.
They noted that the overall crowd inside the SkyCasino was decent with almost all tables open on the first floor with three to seven people per table, while alternate slot machines were in operation.
The stock was last traded up three sen at RM3.21 yesterday.