Genting Malaysia’s 2Q likely to be in the red, says RHB Research

According to research house, RHB Research, Genting Malaysia’s 2Q20 is likely to be in the red while the upcoming 1Q20 results is still likely to register postive EBITDA as visitor arrivals declined slightly prior to the MCO in mid-March.

2Q20 will likely see a net loss due to the 2-month closure, and is expected to register negative EBITDA of operating cost of RM 100 million.

“However, the amount could be lower once cost cutting measures such as salary cuts start to take effect,” it said in its trading notes.

The research house is also estimating FY20F to register RM 141 million losses from a RM 885 million profit after factoring in the extended closure and slower 2H20F recovery.

Additionally, FY20F visitor arrivals are expected to see a decline by 40 percent year-on-year. However despite the challenging period, the company’s strong balance sheet is expected to steer it through the challenge.

“Our MYR2.97 TP is derived after rolling forward our base year while lowering our valuation multiple in view of the further risk of a prolonged Covid-19,” RHB said.

Longer-term prospects remain intact with the expected opening of its outdoor theme park by 3Q20 and continuous turnaround of Empire Resorts.



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