Review

• Genting Berhad’s (Genting) FY23 core profit of RM1.2bn came in below our expectation but within consensus forecast. The variance was largely due to lower-than-expected contribution from Genting Singapore. For this quarter, the company declared a final dividend of 9sen/share, bringing the YTD total dividend to 15sen for FY23.

• Genting’s FY23 revenue and adjusted EBITDA expanded by 21.8% and 21.2% YoY to RM27.2bn and RM8.8bn, respectively. The increase came mainly from Singapore, Malaysia and US operations that more than offset lower earnings from UK operations, Genting Plantation, and oil & gas operations.

• GENS’ FY23 revenue and adjusted EBITDA rose significantly by 40.1% and 39.1% YoY to $S2.4bn and S$1.0bn, respectively. All segments registered decent growth especially the non-gaming segment, thanks to increased foreign visitor arrivals and higher customer spend. Meanwhile, the gaming division benefitted from increased business volume that surpassed 2019 levels on both VIP and mass gaming volume.

• GENM’s FY23 adjusted EBITDA increased 24.4% to RM2.6mn on the back of 18.4% rise in revenue to RM10.2bn. The decent earnings growth was due to low base effect as Malaysia operations remained sluggish last year especially during 1Q22 as not all key markets have opened their borders. In addition, the weak ringgit performance also helped to drive gaming volume in Malaysia and boosted translation gains on US and UK’s contributions (see GENM report).

• Resorts World Las Vegas’s (RWLV) FY23 revenue expanded to approximately RM4.1bn (17.1% YoY) while the adjusted EBITDA soared to RM610.5mn (+74.3% YoY) with decent hotel occupancy rate of 89.7% (vs 84.0% in FY22) higher ADR of US$272 (vs US$243)

Impact

• No change to our FY24-25 earnings projections.

Outlook

• Management observed the new mega casino resort opened in Las Vegas would bring a certain vibrancy to Las Vegas and this would benefit existing players. RWLV will continue to leverage on Hilton branding partnership to attract more high net worth customers.

Valuation

• We upgrade Genting SOP-valuation to RM5.54 (from RM5.30 previously) after revising GENM’s valuation to RM3.17. We believe Genting would benefit from increasing foreign buying interest in Malaysia. Maintain Buy

Source: TA Research - 1 Mar 2024