SOUTH EAST ASIA 14
MALAYSIA
Genting outlook brightens as SkyWorlds opens The crown jewel in Genting Malaysia’s $2.4 billion revamp of Resorts World Genting is making its debut this month, with analysts expecting the attraction to deliver a significant boost to visitation.
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he long-delayed SkyWorlds theme park consists of nine themed worlds. It was originally intended to be a venture with 21st Century Fox, but the U.S. studio pulled out in 2018 saying connections with a gambling operator didn’t sit well with the family-friendly brand of its parent, Disney Corp. The withdrawal sparked a messy round of litigation, which was eventually settled in 2019. Genting expects the park to drive annual visitation to the Genting Highlands resort up to 30 million in the longer term, compared with its 24 million level prior to the pandemic. Maybank analyst Samuel Yin Shao Yang told local media that he’s slightly more conservative and sees visitors of about 26 million to 27 million a year. He estimates that the extra visitation will drive mass market gaming revenue and has the potential to add between MYR120 million and MYR180 million to annual EBITDA. The firm managed to stay in the black at the EBITDA level in 3Q21, but its earnings were severely hit by Malaysia’s lockdown, with the domestic resort only open for one day in the quarter. Still, earnings are likely to improve in 4Q21 and next year, after a “blip” in the third quarter, as the new theme park comes online and borders reopen, Nomura said. The Malaysian operator reported a 42 percent drop in 3Q21 revenue to MYR826.3 million ($194.8 million), while its net loss narrowed to MYR289 million from MYR705 million a year earlier. The group got strong support from its overseas operations, but Covid lockdowns at home pushed its Malaysian operation to an EBITDA loss of MYR165 million from a profit of MYR425 million a year earlier. The group as a whole was EBITDA-positive at MYR62 million, down from MYR301 million a year earlier.
Asia Gaming Briefings | December 2021
The “3Q21 numbers were better than 2020’s worst quarter (2Q20), when even the overseas operations were shut and the cost base was higher,” Nomura said. “We remain positive on GENM, as we believe that investors are likely to look beyond the 3Q21 blip towards a brighter 4Q21F and FY22F, led by the opening of the resort, new attractions, and gradual international border reopening for Malaysia.” Nomura said it was maintaining its buy recommendation on the shares with a target price of MYR3.50. The resort has seen a strong recovery since reopening in October, with visitation particularly strong at the weekend. Nomura said management appears to be targeting a year-end opening for its new outdoor theme park, which is expected to be a key driver for growth. In 3Q21, the U.S. operations were the best performers, with all of the properties open during the quarter. Revenue from the U.S. and Bahamas, where the group operates Resorts World Bimini, soared 421 percent to MYR364 million. Resorts World New York City reported gross gambling revenue of $230 million, stable from the prior quarter, while the share of its loss from its Resorts World Catskills property narrowed to MYR30.9 million, compared with MYR62 million in the prior-year period. Nomura said New York State may be willing to entertain having casinos downstate and has called for a request for information from interested parties. This process will be wrapped up by mid-December, however New York can only issue licenses from 2023. Genting is likely to bid aggressively if the opportunity arises to turn Resorts World New York, which only offers electronic games, into a full-fledged casino. Revenue from the U.K. and Egypt was up 209 percent from the prior year at MYR406 million and up 119 percent sequentially.
