Review

• Genting Berhad’s (Genting) 9M23 core profit of RM922.7mn beat our expectation at 109.5% of our full-year forecast and 95.4% of consensus earnings. The variance was largely due to higher-than-expected earnings contribution from Genting Singapore (GENS).

• Genting’s 9M23 revenue and adjusted EBITDA expanded by 23.9% and 21.6% YoY to RM19.9bn and RM6.6bn respectively. The increase came mainly from Singapore, Malaysia and US operations that more than offset lower earnings from UK operations, Genting Plantation, and oil & gas operations.

• GENS’ 9M23 revenue and adjusted EBITDA rose significantly by 49.7% and 53.1% YoY respectively to $S1.8bn and S$793.0mn. All segments registered decent growth especially the non-gaming segment, thanks to increased foreign visitor arrivals and higher customer spend. Meanwhile, the gaming division benefitted from increased business volume that surpassed 2019 levels on both VIP and mass gaming volume.

• GENM’s 9M23 adjusted PBT grew more than double to RM474.0mn on the back of 21.1% rise in revenue to RM7.5bn. The decent earnings growth was due to low base effect as Malaysia operations remained sluggish last year especially during 1Q22 as not all key markets have opened their borders. In addition, the weak ringgit performance also helped to drive the business volume higher (see GENM report).

• Resorts World Las Vegas’s (RWLV) 9M23 revenue expanded to approximately RM3.0bn (20.3% YoY) while the adjusted EBITDA soared to RM610.5mn (+105.3% YoY) with decent hotel occupancy rate of 90.4% for 9M23 versus 82.4% a year ago. For this quarter, the resort has seen higher growth in the convention business as well as strong performance from casino.

Impact

• We raise FY23/24/25 earnings projections by 66.3/34.6/22.8% after revising: 1) SGDMYR to 3.39/3.3/3.3 from 3.3/3.2/3.1 previously, 2) higher win percentage on VIP volume of 3.1% versus 2.8% previously for FY23, 3) VIP GGR higher by 30% and non-VIP GGR by 52% for FY23-25.

Outlook

• Management observed that almost all hotel rooms in Las Vegas were fully booked over four nights for the 2023 F1 Las Vegas Grand Prix in Nov-23. As such, we can expect another strong quarter ahead in 4Q23. It was reported that Las Vegas Grand Prix 2023 drew 315,000 spectators and brought in an estimated US$1.2 billion in economic impact.

Valuation

• Despite earnings upgrade, we downgrade Genting SOP-valuation to RM5.30 (from RM5.35 previously) after revising the holding company discount higher to 30% (20% previously) with increased preference for direct investment in GENS. The downgrade also takes into account the weak regional gaming sector performance (Figure 2) against the recent global equity rally. Figure 3 shows that the premium of Hong Kong-listed casino stocks has narrowed to 2-3x PE multiples above Malaysia-listed casino stocks. Maintain Buy

Source: TA Research - 24 Nov 2023