Genting Malaysia’s net profit to improve in FY18F
KUCHING: Financial year 2017 forecast (FY17F) is believed to be a transitional year for Genting Malaysia Bhd (Genting Malaysia) as the group’s net profit is expected to improve in FY18F.
AmInvestment Bank Bhd (AmInvestment Bank) believed that FY17F would be transitional for Genting Malaysia as it completes most of the group’s attractions at Resorts World Genting, Malaysia and incurs higher expenses to operate them.
“We believe that the group’s net profit would improve in FY18F as staff workforce and operating expenses stabilise in Malaysia.
“Revenue growth would also be stronger in FY18F due to the 12- month impact of the new attractions,” the research firm said.
As such, AmInvestment Bank would revisit its recommendation onGentingMalaysiaat theendof the year when most of the attractions at Resorts World Genting, Malaysia have been completed.
According to AmInvestment Bank, roughly 500 to 600 hotel rooms are expected to open at Resorts World Genting, Malaysia in the third quarter of FY17 (3QFY17).
“About 400 to 500 of the hotel rooms are expected to be four-star rooms while another 100 hotel rooms are targeted for the VIP customers,” it said.
“The VIP section of Sky Casino is also anticipated to open in 3QFY17.”
As for the outdoor and indoor
We believe that the group’s net profit would improve in FY18F as staff workforce and operating expenses stabilise in Malaysia. AmInvestment Bank
theme parks at Resorts World Genting which are estimated to cost more than RM2.5 billion, the research firm noted that they are envisaged to open in mid-FY18F.
On the back of the additional hotel rooms and a healthy 2QFY17, AmInvestment Bank kept its visitor growth assumption of four per cent for Resorts World Genting in FY17F.
The research firm believed that visitor numbers at Resorts World Genting would be higher in 2QFY17 compared with 1QFY17 on the back of the long Hari Raya Puasa holiday weekend and opening of Genting Premium Outlet in June.
It noted that the number of visitors at Resorts World Genting had fallen by three per cent year on year (y-o-y) in 1QFY17.
On another note, AmInvestment Bank pointed out that risks are widening losses at Resorts World Bimini, Bahamas and impairment for Genting Malaysia’s US$347.4 million investment in the Mashpee Tribe’s promissory notes.
“The notes were issued to finance the pre-development of the First Light Resort and Casino in Massachusetts,” it said.
Currently, AmInvestment Bank forecasted that losses at Resorts World Bimini would narrow from RM372.5 million in FY16 to RM300 million in FY17F.
Also, the research firm has not factored in any impairment on the US$347.4 million promissory notes on Genting Malaysia’s earnings forecast.