PETALING JAYA: The Genting SkyWorlds theme park, which will open its doors tomorrow, will accelerate Genting Malaysia Bhd’s business recovery as it should be a crowd puller, and provide a new income stream while also benefiting other facilities within Resorts World Genting (RWG), according to RHB Research.
“We understand there will be a 20% discount for ticket prices during the soft launch as there are some attractions undergoing the final commissioning process and are still unavailable to the public. The theme park will likely operate at 50% capacity (full capacity: 20,000 visitors at a time) initially due to the SOP in place. Assuming 10,000 visitors a day, we estimate the theme park alone could contribute an annual ebitda of RM210-290 million,“ it said in a report.
The research house understands that RWG’s overall business recovery in fourth-quarter 2021 (Q4’21) was strong despite some slight disruption resulting from the December landslide.
“Even though the crowd at SkyAvenue during our recent site visit (Jan 27) was visibly less, this could be due to it being a weekday. We believe RWG’s business will continue to recover strongly, especially once SkyWorlds opens as it should be a crowd puller and benefit other facilities within RWG through higher footfall.”
Despite the challenges posed by the Covid-19 Omicron variant globally, it said, December 2021 gross gaming revenue (GGR) recorded from Resorts World New York City and Resorts World Catskills stood well – at 90-95% of pre-pandemic levels. On the launch of mobile sports betting platforms in New York by some operators since Jan 8, 2022, the state is on track to set a record for the highest monthly mobile sports betting money wagered among all states in the United States. Given the strong interest seen, Empire Resorts (ER) will benefit greatly once it launches its own platform.
RHB Research maintained a ‘buy’ call on Genting Malaysia and a RM3.58 target price, with a 28% upside and 6% yield.
“We continue to like the stock as a direct beneficiary of tourism recovery play. The imminent opening of Genting SkyWorlds will create excitement among visitors, and can potentially lead to higher footfall to RWG. Valuation is inexpensive. Further upside could come from ER’s ongoing turnaround, especially when New York state mobile sportsbook’s GGR is showing promising growth week-on-week,” said RHB Research.
It said key risks include slowdown in Covid-19 recovery, change in luck factor and regulatory risks.
“On Genting Hong Kong’s recent announcement on potential cross defaults of US$2.8 billion, we opine that it will unlikely affect Genting Malaysia as it does not have any holdings in Genting Hong Kong and its minority shareholders are likely to reject any potential proposal that is related to the bailing out of Genting Hong Kong,” said RHB Research.
