Much better FY23 for GENM 4715 GENTING MALAYSIA BERHAD after weaker Q3 2022?

Much better FY23 for  GENM 4715 GENTING MALAYSIA BERHAD after weaker Q3 2022?

Genting Malaysia Bhd is expected to see a much better financial year 2023 (FY23) backed by border reopening and recovery in tourism activities.

KUALA LUMPUR: Genting Malaysia Bhd is expected to see a much better financial year 2023 (FY23) backed by border reopening and recovery in tourism activities.

Hong Leong Investment Bank Bhd (HLIB) said Genting Malaysia had reported a weaker-than-expected set of results in the third quarter (Q3) 2022.

However, looking ahead, the firm believes Genting Malaysia will see a much better FY23 due to reopening of the remaining hotel room inventory in Resort World Genting (RWG), SkyWorld ride capacity increase and extended operating hours and seasonally stronger Chinese New Year (CNY) period.

"The growth will also be supported by opening of Resorts World Hudson Valley (RWHV) in December 2022 and Super Bowl in February 2023 augured well for Empire's mobile sports betting," it said.

In 2019, when the group first announced its acquisition of loss-making Empire, the group's share price tumbled 11.9 per cent a day after the announcement.

However, in hindsight, HLIB is now starting to appreciate the value behind the acquisition.

The firm said the opening of RWHV was expected to contribute positively to Empire's earnings in the coming quarters.

This is given that Empire is a low capital expenditure capex venture resulting in only marginal incremental depreciation expense post opening.

"As such, with brightening prospects, we view the injection positively as it allows the company to participate in the growth prospects of the Empire," it said.

HLIB maintained its "Buy" on Genting Malaysia with an unchanged target price of RM3.44.

The firm likes the stock as it believes RWG is one of the prime beneficiaries of border reopening and recovery in tourism activities.

"Under the new administration, the tourism segment may benefit as the government capitalizes on the sector as a lever to support the domestic currency and economy.

"We believe that visitations to RWG has the potential to scale beyond pre-pandemic level given the capacity increase and the more diverse crowd it attracts due to the addition of its theme park," it added.

https://www.nst.com.my/business/2022/12/860322/much-better-fy23-genting-malaysia-after-weaker-q3-2022