• GENM’s 9M24 core PATAMI was in line with expectations

• Revenue growth drive by increased UK volumes

• Maintain BUY rating and SOP-derived target price of RM3.30

In line with estimates

Stripping out RM491m unrealized forex gains, RM208m impairment losses (related to ride replacements and fire damages), and RM90m pre-operating expenses, 9M24 core net profit came in at RM560m (+36% YoY). The results were in line with our expectations at 75% of full- year estimates, but ahead of streets at 80%. Group EBITDA rose 7% YoY as revenue increase 10% on higher business volume across all markets, though margins contracted 1ppt due to higher VIP GGR mix at Resorts World Genting, which carries with higher operating costs. Interest expenses rose 12% YoY, reflecting the additional refinancing costs, but are expected to decline marginally in the subsequent quarter without further refinancing-related transactional costs. Associate losses remained largely flat YoY in 9M24.

Encouraging hill top visitation growth

3Q24 revenue grew 2% YoY, driven by a 66% YoY increase in non-gaming revenue, offsetting 11% decline in gaming volume. While Resorts World Genting revenue remains largely flat, UK operations saw revenue growth from increased business volume. RWG GGR rose 4% YoY, underpinned by 9% increase in the VIP segment. The higher VIP mix of 56% weighed on RWG’s EBITDA margins (-1.4ppts) to 31.8%, within its 31–33% guidance. Hilltop visitations were up 10% YoY, with increased foreign visitations (+13%) from Singapore (+3%) and China (>100%). However, daily outdoor theme park ticket sales declined to 2.6k, from 3k following the peak season. Lastly, the effective tax rate in 3Q24 reflects adjustments for over- provisioning in the past 2 quarters, which we expect to normalize moving forward.

Maintain BUY, no changes to our RM3.30 TP

We maintain our BUY call on GENM with an unchanged SOP-derived RM3.30 TP. GENM is currently trading at an undemanding valuation of 6.1x 2025E EV/EBITDA (or -2SD below its mean), which we find attractive. Our expectation of 17.5sen DPS payout in 2024E remains intact. We see potential upside from securing the downstate NYC casino license, which is expected to be awarded by end-25. Key downside risks to our call include lower-than- expected win rates, a hike in gaming taxes, drag from key associates, and value-destructive related-party transactions.

Source: Philip Capital Research - 29 Nov 2024