Gaming sector should improve post-GE14
KUALA LUMPUR: The worst should be over for the gaming industry as uncertainties from the 14th General Election (GE14) diminish while the removal of the goods and services tax (GST) boost consumers’ confidence, analysts observed.
The research arm of Public Investment Bank Bhd (PublicInvest Research) highlighted that the removal of GST could restore consumer confidence as the number forecasting business is still plagued by poor consumer confidence ever since the implementation of GST.
“With the new government imposing zero-rated GST effective June 1, 2018, we believe the number forecasting business would benefit. However, we do not expect ticket sales to improve significantly as the industry is still facing competition from the online and illegal gaming operators.
“Overall, we reckon the worst is over for the number forecasting operators (NFO) and with the GE14 behind us, luck factor should improve compared to pre-GE14 period,” the research team opined.
As for casino operators, PublicInvest Research noted that regional casino business remained robust.
It explained, “Based on the latest statistic released by the Gaming Inspection and Coordination Bureau, Macau’s gross gaming revenue (GGR) continues to grow albeit at a slower rate of growth in recent months.
“However, VIP business is still encouraging. All these suggest that regional casino operations are thriving and we expect this to continue into 2H18.”
As for Malaysian casino business, it said, the gradual opening of Genting Malaysia Bhd’ s( Gen tin g Malaysia) Gen ting Integrateda Tourism Plan (GITP) project would boost visitor arrival and casino revenue going forward but there could also be some offsetting effect owing to escalating cost due to higher depreciation charges.
All in, PublicInvest Research said it remained ‘neutral’ on the gaming sector.
It commented: “We believe share prices of the NFO players have already priced in the positive sentiments arising from zero-rated GST effect as well as the new government’s promise to review unfair tax penalties imposed on corporates and individuals during the previous regime.
“This could lead to a positive outcome for Magnum’s unsettled litigation with the Inland Revenue Board.
“We also like Genting for its exposure to regional gaming business via Genting Singapore and reiterate our ‘outperform’ call.”