Resorts World Genting (RWG), the only casino in Malaysia, has recently unveiled a new mass gaming floor: Genting Casino. While this move is seen as a positive step for Genting Malaysia, an analyst cautions that its impact on the company’s overall performance will be minimal.
Shao Yang Yin, from Maybank, points out that – despite the added gaming capacity – the new floor is not large enough to compensate for the absence of key mass gaming floors, which are still under renovation.
The Genting Casino is divided into two areas with distinct themes—one resembling the Sky Casino, and the other featuring traditional Chinese elements. While the floor includes a mix of slot machines and electronic tables, it is relatively modest in size compared to the closed Circus Palace and Hollywood mass gaming floors, which are much larger.
The new casino offers only 36 conventional tables, with minimum bets ranging from MYR10 ($2.2) to MYR100 ($22). However, the lack of smoking lounges is seen as a downside, as gamblers must leave the casino to smoke, potentially affecting the length of their play.
In a recent visit to RWG, Shao Yang Yin observed that, while the Genting Casino’s opening adds capacity, it is unlikely to “move the needle” for Genting Malaysia’s overall revenue. “The Genting Casino is a positive addition, but its size is nowhere near the capacity of the Circus Palace and Hollywood floors, which remain closed for renovations,” Yin said.
The renovations of these larger gaming floors have been delayed since February 2024, with no definitive reopening date in sight. Genting Malaysia has reassured the public that both Circus Palace and Hollywood will eventually reopen, but the timing remains uncertain. As a result, the company’s short-term gaming revenue projections have been revised downwards, with analysts cutting their long-term mass market gross gaming revenue (GGR) forecasts by 25 percent.
Despite the limited immediate impact of the new Genting Casino, there are still positive aspects of the development. For example, the casino’s use of electronic tables and slot machines may help reduce operational costs by requiring fewer staff, which could result in higher margins. However, the new floor still represents only a small fraction of the total capacity previously available when the Circus Palace and Hollywood floors were operational.
Yin remains cautious about revising earnings estimates for Genting Malaysia. “The new casino floor is a step in the right direction, but until the larger gaming areas are fully reopened, we do not see an immediate need to revise our earnings forecasts,” he said.
For analyst to consider increasing their earnings estimates, the reopening of the Circus Palace and Hollywood mass gaming floors is essential, as their combined capacity represents a significant portion of RWG’s overall gaming offering.
In the meantime, analysts maintain their ‘BUY’ recommendation for Genting Malaysia, noting that the company’s current valuations remain attractive despite the slower-than-expected recovery in its mass gaming operations. With potential upside from the reopening of the larger gaming floors, there is optimism that Genting Malaysia can eventually recover its previous revenue levels.
Genting Malaysia’s latest financial update revealed a 3Q24 revenue of RM6.5 billion ($1.47 billion), reflecting an 11 percent decline from RM7.4 billion ($1.65 billion) in the same quarter of the previous year. This drop was mainly attributed to a decline in the Leisure & Hospitality Division.
However, for the nine months ending September 30th, 2024, the company saw financial growth. Genting Malaysia reported a revenue of RM20.8 billion ($4.69 billion) and EBITDA of RM7.1 billion ($1.6 billion), representing increases of 5 percent and 8 percent, respectively, compared to the same period in 2023.
