THE temporarily – yet indefinite – closure of the Resorts World Genting (RWG) casino complex in view of the imposition of movement control order (MCO 2.0) in all states except Sarawak beginning tomorrow (Jan 22) will be a bane for Genting Malaysia Bhd.
This is especially so given the possibility of an extension to the MCO 2.0 duration is high, according to Hong Leong Investment Bank (HLIB) Research.
“We expect the visitorship for RWG to remain extremely subdued even if MCO restrictions in Pahang is lifted as the amount of cases in populous states like Kuala Lumpur, Selangor, Penang and Johor are still at very high levels,” justified analyst Low Jin Wu in a company update.
“We have cut our year-on-year visitorship growth rate by circa 20% as we have assumed a total effective lockdown period of about two months.”
“Although it is still too early for us to gauge the effectiveness of the current MCO 2.0 measures, we choose to be on the conservative side of things.”
In line with the MCO 2.0, which will be implemented in various states, including Pahang, till Feb 4, RWG will be temporarily closed (except for essential resort-based services such as security, fire brigade, utilities and clinics).
“We cut our FY2021 forecast (of Genting Malaysia) by 32% to factor in our expectations on lower overall visitorship due to the resurgence of COVID-19 cases globally while maintaining our FY2022 forecast as we are expecting a steep V-shaped recovery to happen in FY2022,” projected Low.
All-in, HLIB Research maintained its “hold” rating on Genting Malaysia with a lower target price of RM2.27 (from RM2.43 previously) to reflect lower EBITDA (earnings before interest, taxes, depreciation, and amortisation) forecasts following adjustments on visitorship in FY2021.
“We believe that investor sentiment would be muted at this juncture due to the uncertainties regarding the length of the lockdown period,” added the research house.
At 10.22am, Genting Malaysia was down 2 sen or 0.84% at RM2.36 with 1.61 million shares traded, thus valuing the company at RM14.01 bil.– Jan 22, 2021
