KUALA LUMPUR (June 21): Genting Malaysia Bhd said its Malaysian operations under Resorts World Genting (RWG) are ramping up by leveraging existing assets of the casino and hotel operator in anticipation that the reopening of the country's borders will further support the group’s recovery from the impact of Covid-19-driven movement restrictions.

In its latest corporate presentation in June 2022, Genting Malaysia said RWG will place emphasis on maximising yield contributions by intensifying database analytics and targeted marketing efforts.

Genting Malaysia said RWG will also "enhance overall operational efficiencies and service delivery to elevate quality of guest experience [and that the] progressive roll-out of the remaining attractions at Genting SkyWorlds [is] a focus".

However, shares of Genting Malaysia have been under selling pressure recently, falling by 9.12% to RM2.79 on Monday, from its recent high of RM3.07 on June 8. It closed at RM2.84 on Tuesday.

This compares to a consensus target price of RM4.42, according to Bloomberg data, with 15 analysts having the resort-and-casino operator on "buy", with three putting it on "hold" and one "sell".

The decline was in tandem with Genting Bhd, which fell 15.36% to RM4.52 on Monday from RM5.34 on June 8. The stock has a consensus target price of RM4.67, with 13 buys and two holds, with no sell recommendation.

Apart from general market jittery arising from potential recession, analysts are of the view that recent selling pressures were due to profit-taking after the stocks' recent rally that were driven by news that Genting’s 20%-owned medical venture TauRx Pharmaceuticals had seen progress in its development of an Alzheimer’s drug.

“To put it simply, we found those Macau casinos listed in Hong Kong are cheaper. Yes, Macau has its own problems, like China’s zero Covid-19 policy. But valuation-wise, they are still 60% lower than pre-pandemic levels,” TA Securities analyst Steve Tan Kam Meng told theedgemarkets.com when contacted.

“Meanwhile, share prices for Genting and Genting Malaysia have almost fully recovered to pre-pandemic levels, although operationally, they have yet to fully recover,” he said.

Genting Malaysia remained loss making in its first quarter ended March 31, 2022 (1QFY22), although net loss was narrowed by 74% to RM126.53 million from RM483.59 million a year ago, as revenue more than doubled to RM1.72 billion from RM623.35 million.

Genting, on the other hand, trimmed its net loss by 40% to RM199.68 million in 1QFY22 from RM331.76 million, as revenue grew 87% to RM4.21 billion from RM2.25 billion.

Malacca Securities head of research Loui Low Ley Yee also noted that investors’ excitement towards Genting seems to be waning, with no further developments announced in regards to TauRx. “For Genting Malaysia, share price is trading around pre-pandemic levels, so the market might be waiting for more actual earnings recovery before returning to the counter,” he said over the phone.

Concerns over global economic recession also weighed on both Genting and Genting Malaysia as well, said an analyst with a local investment bank.

“The recovery outlook is not as good as one month ago. Now, the risk of recession is getting higher, so foreigners are selling to take a risk-off approach. Hospitality expenses are discretionary — people would cut this kind of spending if a recession materialises,” he said.

“At around RM3.00, Genting Malaysia's PE (price-to-earnings ratio) is also quite high, based on 2022 [financial] numbers,” he added.

On Tuesday's close, Genting Malaysia settled five sen or 1.8% higher at RM2.84, valuing it at RM16.86 billion, while Genting gained nine sen or 2.0% to RM4.61, giving it a market capitalisation of RM17.87 billion.