Casino operations boost Genting’s performance
Genting Bhd’s (Genting) casino operations has lifted the group’s performance and analysts believe that its business should continue to recover quickly from the reopening of borders.
In a report, the research team at Kenanga Investment Bank Bhd (Kenanga Research) said: “We continue to like Genting which we believe is a good pick for economy recovery play as its businesses should recover quickly from the lifting of crossborder restrictions.
“In addition, new casino Resorts World Las Vegas could be a wild card judging from initial data.”
On its first nine months of the financial year 2022 (9MFY22) performance, the research team noted that on a yearly basis, Genting saw its 9MFY22 turned profitable with core profit of RM198.8 million from loss of RM466.1 million with revenue rising 84 per cent.
“This was largely thanks to borders reopening in Malaysia and Singapore which led to 212 per cent jump in Leisure & Hospitality’s adjusted EBITDA to RM4.04 billion on the back of 125 per cent hike in revenue,” it explained.
It also pointed out that its plantation sector (earnings up 23 per cent) and oil & gas (earnings up 60 per cent) are the other two major earnings drivers as the former benefited from higher CPO prices while the latter gained from higher oil prices and a stronger US dollar.
On a quarterly basis, Genting’s 3QFY22 core profit rose 20 per cent to RM213.9 million as revenue grew by eight per cent thanks largely due to Leisure & Hospitality with adjusted EBITDA rising 18 per cent owing to the reopening of borders of Malaysia and Singapore from April 2022.
“However, profit was mitigated by lower earnings from plantation on lower CPO realised prices and higher production costs,” it added.
All in, Kenanga Research maintained its ‘outperform’ rating on the stock.