• 9M23 core net profit was in line, at 74%/73% of our/Bloomberg consensus’ full-year forecasts, amid better performance for all subsidiaries.

• GENT remains a strong proxy to the revival of tourist arrivals in both Malaysia and Singapore, in our view.

• Reiterate Add with unchanged TP of RM6.95 based on a 30% SOP discount.

Strong 3Q23 Results: 9M23 Core Net Profit Within Expectations

• Genting (GENT) posted a 3Q23 core net profit of RM545m (2Q23: -RM21m), bringing 9M23 core net profit to RM673m (9M22: RM110m), on a better showing from all key subsidiaries, namely Genting Singapore (GENS), Genting Malaysia (GENM) and Genting Plantations (GENP). 9M23 EBITDA from GENS and GENM improved by 46.9% and 21.2%, respectively, to RM1.2bn and RM779my. 9M23 core net profit was in line at 74%/73% of our/Bloomberg consensus’ full-year forecasts. For 3Q23, Resort World Las Vegas’ (RWLV) hotel occupancy/average daily rate (ADR) were 91%/US$246 (vs. 90%/US$243 in 2Q23). 3Q23 EBITDA also improved to US$52m (2Q23: US$34m,1Q23: US$50m), on the back of revenue of US$222m (vs. 2Q23: US$206m, 1Q23: US$218m) due to higher number of convention events.

GENM’s Visitors to Mid-hill Near Pre-pandemic Levels

• The key highlight for 3Q23 was the robust recovery in foreign visitors to Resort World Genting (RWG) (+53% yoy; mainly from SG, Indonesia, China and India), which led to an increase of 32%/26%/14% yoy in hotel rooms sold/hotel guests/room rates in 3Q23. Total visitors to mid-hill reached 6.4m in 3Q23 (+4% yoy) and 18.1m in 9M23 (+13% yoy; recovered to 89% of pre-pandemic 9M19 level), while hill-top visitors topped 5.4m in 3Q23 (+3% yoy) and 15.7m in 9M23 (+13% yoy), driving GENM’s 9M23 revenue growth of 21% yoy.

GENS’s GGR Exceeded Pre-pandemic Levels

• GENS’s hold normalised (adjusted for win rate) GGR rose 31% qoq to S$715m in 3Q23 and exceeded pre-Covid-19 levels for both mass and gaming GGR and VIP. Nongaming revenue grew 26% qoq to S$230m, at 98% of pre-Covid-19 levels due to higher foreign tourist arrivals and customer spend during the summer holidays.

Reiterate Add With An Unchanged TP of RM6.95

• We reiterate our Add rating with an unchanged TP of RM6.95, based on a 30% holding company discount to SOP. GENT remains a credible proxy for the recovery in tourist arrivals from China into Malaysia and Singapore, in our view, given that 71-75% of its FY23-24F EBITDA comes from GENM and GENS. As it stands, GENT’s 53% stake in GENS is now valued at 22% above its current market value. Key downside risks include a slowing economy, lower CPO prices, and weaker-than-expected tourist arrivals. Potential re-rating catalysts for GENT would be associate TauRx Pharmaceuticals Ltd (TauRx) receiving FDA approval for its Alzheimer drug for commercial use (its Phase 3 study received encouraging results in Oct 22), and GENM winning a downstate New York casino licence.

Source: CGS-CIMB Research - 24 Nov 2023