WHILE Maybank IB Research is upbeat about prospects of the gaming sector, it remains wary about the slow recovery pace of number forecast operators (NFOs) to their pre-COVID levels.
According to the research house’s estimates, the 2Q CY2022 NFO sales/draw of Sports Toto Bhd and Magnum Bhd only hit circa 80%/circa 70% respectively of their pre-COVID levels.
“We had expected a much stronger recovery in 2Q CY22 because Malaysia reached the endemic stage of the COVID-19 pandemic on April 1 and removed most COVID-19 related restrictions throughout 2Q CY2022,” opined analyst Yin Shao Yang in a Malaysian gaming sector update.
“We posit three reasons why it will be difficult for sales of legal NFOs to recover to pre-COVID levels: (i) current clamp down on illegal NFOs not as vigorous as when in 2019; (ii) illegal NFOs wrested market share during MCOs (movement control order) and maintained them; and (iii) departure of 2 million foreign workers during the COVID-19 pandemic.”
With regard to the ‘silver bullet’ in the form of gambling apps that the NFO subsector can leverage to boost their sales revenue, Maybank IB Research said they have enabled unlisted Da Ma Cai “in weathering the COVID-19 pandemic better than Sports Toto and Magnum”.
“Da Ma Chai which introduced dmcGO in Dec 2016 has seen its gross NFO sales/draw/outlet grew every year until the COVID-19 pandemic struck in 2020,” observed the research house.
“While we understand that the powers that be are not averse to the idea of gambling apps, our channel checks inform us that their response is to move past the 15th General Election (GE15) before arriving at a decision.”
Despite having downgraded the NFO subsector to “neutral” from “positive”, Maybank IB Research has reiterated its “positive” outlook on the casino subsector.
“Operations of both Genting Malaysia Bhd and Resorts World Genting and Genting Singapore’s Resorts World Sentosa took a positive turn in 2Q CY2022 as borders re-opened, COVID-19 testing requirements were axed and COVID-19 related restrictions were gradually eased,” noted the research house.
“Even Genting Bhd’s Resorts World Las Vegas which had been struggling since its opening on June 24 last year has exhibited signs of a positive turnaround in 2Q CY2022. We expect the aforementioned positive momenta to continue for the rest of 2022 and 2023.” – Sept 8, 2022
