Due to the “tad later than expected” return of international visitors to Resorts World Genting (RWG), the Maybank Investment Bank has lowered its earnings estimates for Genting Malaysia by 27 percent for FY23.
“RWG visitor arrivals have recovered post-Batang Kali landslide, but there is still a shortfall about FY19A levels. Foreign visitors have not returned en masse due to low flight capacity. Yet, the fleet strategy of Malaysian carriers implies to us that they will return, albeit in FY24E.”
According to research from analyst Samuel Yin Shao Yang, Batang Kali landslide caused 1Q23 RWG visitor arrivals to fall 11 percent quarterly to 4.7 million. While RWG visitor arrivals began to improve from March 2023 onwards, the current quarter-to-date RWG daily visitor arrivals of 56,000 imply 2Q23 RWG visitor arrivals of 5.1-5.2 million, which is still 15 percent below FY19A levels.
The research revealed that domestic and Singaporean visitor arrivals to RWG have fully recovered to FY19A levels, but are still below pre-COVID levels on fewer tourists.
“The aforesaid 15 percent shortfall is due to visitors from key markets like Indonesia, Hong Kong, and China having not returned en masse due to low flight capacity”, pointed out Yang.
Regarding flight capacity, analyst Samuel Yin Shao Yang mentioned that Malaysian carriers carried 2/3 of international passengers pre-COVID. In this way, the number of aircraft operated by Malaysian carriers will reach 2019 levels by the end of 2023, which implies that RWG visitor arrivals may hit 2019 levels in 2024 and exceed 2019 levels by the end of 2024.
The analyst believes that RWG visitor arrivals will exceed 2019 levels only in 2025. Thus, Maybank trims 2024 RWG visitor arrivals estimate to be 24.2 million and 2025 to be 25.2 million.