Investment bank Maybank has revised its earning estimates for Genting Berhad due to the strong performance posted by the group in 3Q23.
According to the latest research, analyst Samuel Shao Yang Yin has raised the earnings estimates for the current year by 37 percent. For FY 2024 and FY 2025, there is also an increase of 15 percent and 11 percent, respectively.
‘Results exceeded expectations due to better-than-expected Resorts World Sentosa (RWS) VIP volume and Meizhou Wan contributions. In fact, the core net profit in 3Q23 reached its highest point since 4Q19.’
In this context, the analyst believes that the earnings outlook for Genting Berhad’s major segments is ‘bright.’
Regarding Resorts World Las Vegas (RWLV), Yin notes that the property ‘also appears to have found its footing with another record EBITDA of $52 million in 3Q23.’
Genting Berhad reported its 3Q23 financial results on Thursday, with its earnings outperforming Genting Singapore and Meizhou Wan. The firm’s 3Q23 core net profit stood at MYR519.8 million ($111 million), representing a 203 percent yearly improvement and a 119 percent quarterly increase.
On closer inspection, Maybank notes that the earnings outperformance was due to 3Q23 RWS’ VIP gross gaming revenue (GGR) surging 35 percent quarter-to-quarter to SG$361 million ($269 million) in top-line contribution – or 75 percent more than the brokerage expected.
During 3Q23, RWG benefited from increased local spending per person, RWS saw gains from higher tourist numbers, and RWLV operations achieved a new EBITDA high of $52 million.
Regarding the current quarter, the analyst expects RWG and RWS to benefit from seasonally higher visitation. RWLV also benefited from the recently concluded Las Vegas Grand Prix.
The investment memo also notes that a shift in the mass market mix will expand margins due to reduced commissions and rebates.
Simultaneously, the analyst highlights the persisting issue of bad debts, as Chinese individuals account for the majority of Genting Singapore and Genting UK VIPs, and gambling debts are not enforceable in China.
Genting Berhad is the largest casino conglomerate in Southeast Asia. The company owns 49 percent of Genting Malaysia and 53 percent of Genting Singapore. Through shareholding, the firm operates Resorts World Genting (RWG) and Resorts World Sentosa (RWS).
