Maybank Investment Research remains positive on Genting casinos

PETALING JAYA: Genting Malaysia Bhd’s 2018 earnings are expected to rebound as the VIP win rate normalises and gaming volume increases, said Maybank Investment Research.

Also, the research house expects earnings growth for Genting Singapore plc to shift from cost rationalisation in 2017 to VIP market recovery in 2018.

It noted that nine months’ (9M17) earnings before interest, tax, depreciation and amortisation of Resorts World Genting (RWG) fell 15% year-on-year due to er-than-expected 9M17 VIP win rate.

“Assuming normal RWG VIP win rate, coupled with our unchanged RWG VIP volume growth forecast of 15% per annum from 2018-2019, we maintain our RWG VIP gross gaming revenue (GGR) growth forecast of 24% in 2018 and 15% in 2019.

“For RWG mass market GGR, we maintain our expectation of it to grow in a more stable fashion at 14% per annum from 20182019.” low-

It also believes there is upside to the Singaporean VIP market, raising its VIP volume growth forecasts to 10% for 2017, and 5% for 2018 but maintaining 5% for 2019.

“While we maintain our Singapore mass market GGR growth forecast of -2% for 2017, 0% for 2018 and 5% for 2019, we do not discount the possibility that Resorts World Sentosa (RWS) may regain market share at the expense of Marina Bay Sands due to the recovering ringgit-Singapore dollar exchange rate.”

Maybank Investment Research’s top pick in the sector is Genting Bhd, which it views as a cheaper proxy to Genting Malaysia and Genting Singapore.

It has a “buy” call on Genting Singapore as the counter is still below its historical mean and may monetise its non-gaming assets to bid for Japanese casino licence this year. The research house has a “hold” call on Genting Malaysia given its near- to medium-term valuations are above its historical mean.