Genting Malaysia to see pre-Covid earnings by Q2, says Maybank IB
KUALA LUMPUR: Better prospects in the gaming business after the Omicron wave in the first quarter (Q1) 2022 would pave the way for Genting Malaysia Bhd to earn significantly in the second quarter (Q2) 2022.
Maybank Investment Bank Bhd (Maybank IB) is looking out for differences between pre-and post-Covid operations for Resort World Genting (RWG) as non-members have been allowed to enter the casino since pre-Chinese New Year (February 1, 2022) and social distancing requirements have been eased since Malaysia reached the endemic stage on April 1, 2022.
“We visited RWG on a weekday, and the mass gaming floor was busy. The only legacy of the Covid-19 pandemic is the requirement to wear masks.
“Reflective of the current labour shortage pervading Malaysia, there has been more emphasis on electronic gaming such as slot machines, electronic table games, and gaming via iPads.
“We are also encouraged that Indonesia has agreed to lift its ban on sending its citizens to Malaysia to work from August 1, 2022, which we hope will ease the labour shortage,” the firm said.
Recall that after not announcing a traditional interim dividend per share (DPS) in August 2021, Genting Malaysia injected US$150 million into the company’s 49 per cent-owned Empire Resorts in October 2021.
Encouragingly, Maybank IB Research said Genting Malaysia’s international businesses’ earnings have recovered to pre-Covid levels thanks to revenues returning to or close to pre-Covid levels and fewer staff.
Most positively, Genting Malaysia stated that Empire Resorts might not need any more equity injections going forward, provided that there is no full-blown global recession.
“Given that Genting Malaysia’s earnings outlook is improving, a return to Genting Malaysia announcing an interim dividend when it reports Q2 2022 results in late August 2022 is not unwarranted.
“For now, we maintain the financial year (FY22) DPS of 9 sen, which comprises only a special DPS and does not impute any interim DPS,” it said.
Overall, Maybank IB has maintained a more sanguine view of Genting Malaysia.
The firm has revised the company’s FY22/FY23/FY24 earnings per share (EPS) by – 30/+7/+7 per cent.
“We maintained a Buy call on the stocks with a revised target price of RM3.27 from RM3.30,” it added.