Review

• Genting Berhad’s (Genting) 1Q24 core profit of RM592.1mn came in above expectations. The variance was largely due to higher-thanexpected contribution from Genting Singapore.

• Genting’s 1Q24 revenue and adjusted EBITDA expanded by 27.6% and 40.4% YoY to RM7.4bn and RM2.6bn respectively. The increase came mainly from all gaming units expect Empire Resorts. It is worth nothing that Genting Singapore achieved its best quarterly performance in terms of revenue and adjusted EBITDA in 1Q24.

• GENS’ 1Q24 revenue and adjusted EBITDA rose significantly by 61.9% (+73.7% in ringgit) and 92.7% (+104.7% in ringgit) YoY to S$784.4mn and S$369.5mn respectively. All segments reported decent growth especially the gaming segment, leading to margin expansion to 47.9% (vs 40.6% in 1Q23) at EBITDA level. Management attributed the strong 1Q24 performance to relaxation of visa regulation between China and Singapore, effective February 2024. Looking forward, the company will focus on construction works for the new Minion Land, the Singapore Oceanarium, and the Central Lifestyle Connector, targeting for opening in 2025.

• GENM’s 1Q24 adjusted EBITDA rose 10.3% amid 21.1% growth in revenue. All gaming units (except associate Empire Resorts) reported stronger gaming volume, especially Malaysia operations, thanks to higher visitor arrivals and recovery in win rate. UK and US operations chalked up EBITDA of RM73.9mn (+74.3%) and RM153.4mn (+10.8% YoY) respectively, which were partially contributed by weak ringgit performance (see GENM report).

• Resorts World Las Vegas’s (RWLV) 1Q24 revenue grew marginally to RM1.0bn (4.3% YoY) while the adjusted EBITDA slipped to RM185.5mn (- 15.3% YoY). The dismay performance was due to lower win rate and decline in average room rate to US$298 in 1Q24.

Impact

• We raise our FY24-25 earnings projections by 26-42% after factoring in higher contribution from Genting Singapore and higher losses in Empire Resorts.

Outlook

• The development of TauRx to combat Alzheimer’s disease is in the process of submitting HMTM (Hydromethylthionine mesylate) for regulatory approval in the UK and US.

• For Resorts World Las Vegas, management will continue leveraging on Hilton branding partnership to attract more high net worth customers to the resort.

Valuation

• We upgrade Genting SOP-valuation to RM5.77/share (from RM5.54 previously) after revising GENS and GENM’s DCF valuations accordingly with higher holding company discount of 40%. We believe Genting would benefit from increasing foreign buying interest in Malaysia. Maintain Buy

Source: TA Research - 31 May 2024