HLIB maintained a BUY call in GENM with a target price of RM3.28 as the long term recovery remains intact. Going forth, while we reckon near-term earnings will remain dicey, GENM’s prospect is set to improve in anticipation of exponential recovery once the Covid-19 cases in Malaysia is under control, underpinned by promising vaccination status (adult population vaccination rate stood at ~88% on 3 Oct) and hopes of travel restriction to be lifted as early as Nov.

May breakeven in 4Q21. To recap, PM earlier proposed to allow more tourist destinations to reopen to local travellers, lifting its inter-state travel ban once at least 90% of its adult population are vaccinated. Overall, market is likely to look beyond a washout 3Q21 but bracing for a breakeven 4Q21, premised on the reopening of Resort World Genting (RWG) effective 1 Oct and probably the Genting SkyWorlds theme park in Dec 2021 to coincide with the school holidays (to attract both gaming and non - gaming visitors), as well as the strong earnings rebound from US/UK operation.

Pending for a symmetrical triangle breakout. After surging from RM2.69 (5 Aug low) to a high of RM3.19 (7 Sept), the stock eased 6.2% to close at RM2.99 last Friday. We expect GENM to find a sound support near RM2.90-2.99 zones as investors continue to weigh on recovery theme in the gaming and tourism sectors, as accelerating vaccination program towards full vaccination by end Oct should likely relax business operating and movement restrictions. Technically, GENM is pending for a symmetrical triangle breakout. A successful breakout above its downtrend line resistance (RM3.16) will spur the price toward RM 3.19-3.31-3.42 levels. Cut lost at RM2.86.

Source: Hong Leong Investment Bank Research - 4 Oct 2021