GENM to start seeing benefits from GITP expansion in 2018

With the GITP expansion plan expected to start bearing fruit this year, 2018 should be a strong year for Genting Malaysia Bhd, say analysts.

Kenanga Investment Bank recently upgraded Genting Malaysia from “market perform” to “outperform, adding that the recovery in VIP volume Singapore and the new market in Japan will also provide opportunities for parent company Genting Bhd.

According to reports, Nomura is also expecting an increase in revenue from Genting Malaysia in 2018 due to capacity expansion.

“In Genting Malaysia’s FY17Q3 results, VIP volume increased in double digits, and mass volume [went] up in single digit year-on-year, suggesting that new gaming floors are succeeding in boosting demand,” Nomura analyst Tushar Mohata told The Edge Financial Daily.

Mohata however said there were still concerns related to rising costs, noting that the casino operators’ earnings have been dragged by higher start-up spending.

Other analysts have warned that the GITP may take longer than expected to optimize returns from its investment.

“Although we remain optimistic of Genting Malaysia long-term growth prospects supported by the GITP, we believe that the stock has run ahead of its fundamentals at present, and the high expectations built up by the investment community could lead to near-term earnings disappointments,” said Alliance DBS’ Cheah King Yoong.