Upon learning that Genting Malaysia has no immediate plans to reopen the two gaming areas within its flagship resort, Resorts World Genting (RWG), Malayan Banking has lowered its profit expectations for Genting Malaysia.
Last week, during the financial analyst conference call, Genting Malaysia revealed its unexpected plan, stating that it would only reopen the Circus Palace and Hollywood gaming areas when there is sufficient demand.
These gaming areas were suddenly closed in February, and the company later stated that it planned to upgrade and renovate them before reopening. However, sources told the media that the floors seem to be undergoing "very minimal renovation work."
After Genting Malaysia announced its third-quarter financial report for 2024 last weekend, Samuel Yin Shao Yang from Malayan Banking expressed in his research report that he was "surprised" that Genting had not clearly disclosed specific plans to reopen these two floors. He noted, "These areas were closed in February 2024 due to uncertainty in demand, and we originally expected that they would reopen around the year-end holidays to capitalize on business opportunities."
The analyst also reduced Genting Malaysia's long-term profit expectations by up to 21%, and lowered the annual forecast for RWG's mid-field gaming gross revenue (GGR) by 25%, mainly due to the continued closure of the Circus Palace and Hollywood floors.
He stated that these adjustments led to a reduction in his forecast for Genting Malaysia's net profit for the fiscal year 2024 by 5% to 1.35 billion ringgit, for the fiscal year 2025 by 21% to 1.67 billion ringgit, and for the fiscal year 2026 by 20% to 1.88 billion ringgit.
Last week, Genting Malaysia announced that its total gaming revenue in Malaysia was flat year-on-year, but its adjusted EBITDA decreased by 13% to 493.4 million ringgit ($111 million) due to higher labor costs and casino operating costs.
Yin expects a slight improvement in EBITDA for the fourth quarter due to the year-end holidays.
