RWG recovery momentum should continue in 2H22. After returning into black in 2Q22, we opine that GENM’s recovery momentum will extend into 2H22, mainly driven by RWG. This is supported by the launch of additional rides in SkyWorlds theme park (3 more attractions to be opened in 4Q22) and the re-opening of Genting SkyWorlds hotel capacity. This will allow GENM to harness the full potential of SkyWorlds via attracting previously untapped Muslim market that represents c.63% of Malaysian population. The increased footfall of the theme park should also have positive spill -over effects on other venues in RWG. Moreover, we anticipate an increase in foreign tourist arrivals in 2H22 in wake of the weakening ringgit and pent-up demand for traveling.

Budget 2023. We remain cautiously positive on GENM ahead of the tabling of Budget 2023 on 7 Oct due to no detrimental new taxes anticipated. We think another round of casino tax and license fee hike is unlikely, given the gaming players are still recovering from the pandemic while the latest hike was introduced not too long ago in 2019.

Back to range bound support. After failing to break the formidable RM2.92-3.00 hurdles, GENM has corrected back to RM2.70-2.78 range bound support levels. Traders are advised to deploy a range-bound trading strategy –buy at RM2.70-2.78 and sell near RM2.92-3.00 levels. A decisive breakout above the RM3.00 barrier may signal a new upleg, spurring greater upside toward RM3.17-3.23 levels. Cut loss: RM2.64.

Source: Hong Leong Investment Bank Research - 4 Oct 2022