Maybank Investment Bank (Maybank IB) visited Resorts World Genting (RWG) on 14 Mar 2024 to observe their operations. Maybank IB’s view, mass market GGR will take a backseat in FY24E after Genting Malaysia (GENM) temporarily shuttered the Circus Palace and Hollywood mass gaming floors for renovation but history tells us that it will come back stronger from FY25E onwards.
Maybank IB maintains a BUY call with a lower MYR3.16 DCF-TP (-3%).
Maybank IB cuts their FY24E earnings by 15% but leave FY25E and FY26E earnings unchanged and trimmed their DCF-TP to MYR3.16 from MYR3.26.
With >10% upside potential still, Maybank IB maintains their BUY call on GENM. VIP gaming floors at Genting Casino still open The Circus Palace and Hollywood mass gaming floors were shuttered for renovation on 28 Feb 2024. Apparently, plans to renovate them were mulled as early as 2 years ago.
Maybank IB noted that renovations have not commenced despite having been shuttered for 2 weeks by the time of the visit.
GENM stated that it is not yet able to guide on when the Circus Palace and Hollywood mass gaming floors will reopen. That said, Maybank IB believes that they will reopen by year-end to capitalise on the year-end holidays.
Mass gaming floors at Sky Casino buzzing
Maybank IB was positively surprised on how crowded Sky Casino was considering it was a weekday morning. The obvious explanation is that gamblers who used to patronise the Circus Palace and Hollywood mass gaming floors were patronising Sky Casino.
Smatterings of Mainland Chinese accent could be heard, suggesting decent gaming participation by Chinese tourists.
Maybank IB also noticed that the ‘NO SMOKING’ sign at tables have been removed which they believe is positive for table yields.
Maybank IB cuts FY24E earnings by 15%
Assuming that the Circus Palace and Hollywood mass gaming floors will reopen 9 months from 28 Feb 2024 and 50% of their mass market GGR migrate to the Sky Casino, Maybank IB has lowered their FY24E RWG mass market GGR forecasts by 19%.
Net impact of the above is to cut FY24E earnings by 15%
Anyhow, Maybank IB maintained their FY25E/FY26E earnings which are premised on RWG total GGR recovering to 104%/106% of FY19A levels. History has shown that RWG GGR grows after gaming floors are expanded or renovated.
