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Gaming firms disappointing in Q1 but recovery on track

RHB Research said Genting Malaysia Bhd’s numbers had fallen short of expectations mainly due to lower-than-expected fIrst quarter (Q1) 2022 revenue, amid a high number of Covid-19 cases and the hold percentage from Malaysia.

KUALA LUMPUR: Recovery is on track for the gaming sector as countries transition towards living with Covid-19, said RHB Research.

While casino operators' earnings generally underperformed estimates due to a slower-than-expected rebound, their recovery continued to progress forward, it added.

"The recovery in number forecast operators' (NFOs) ticket sales seems to be slower than anticipated, but the worst should be over given the end of movement restrictions and the resumption of economic activity," RHB Research said in a report today.

RHB Research said Genting Malaysia Bhd's numbers had fallen short of expectations mainly due to lower-than-expected fIrst quarter (Q1) 2022 revenue, amid a high number of Covid-19 cases and the hold percentage from Malaysia.

Genting Bhd was also disappointed, as Genting Malaysia and its power segment's underperformance outweighed the outperformance of Genting Plantations and its oil and gas (O&G) segments.

Meanwhile, RHB Research said Magnum Bhd had missed the firm's expectations, as its revenue fell short at 20 per cent of its full-year forecast.

"The disappointing earnings were mainly due to softer-than-expected ticket sales, and higher-than-expected prize payouts," it said.

The firm said Sports Toto Bhd outperformed, mainly due to the stronger-than-expected contribution from its UK motor dealership segment.

"This, in turn, was due to stronger-than-expected used car profit margins, fuelled by strong demand and tight supply," it said.

Post results, RHB Research has trimmed Genting Malaysia's financial year 2022 (FY22) to FY24 earnings forecasts by 10-3.0 per cent, Genting's by 13-2.0 per cent, and Magnum's by 30-15 per cent.

"We lifted Sports Toto's FY22 earnings by 3.0 per cent on stronger motor sales and margins.

"Despite a disappointing Q1 2022, we maintain our Overweight rating on the sector, as the casinos' recovery is still on track and they should see better future earnings.

"This is given the reopening of borders and resumption of tourism activities in key markets in Q2 2022," it added.

https://www.nst.com.my/business/2022/06/803487/gaming-firms-disappointing-q1-%C2%A0recovery-track

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