• Genting Malaysia’s (GENM) 4Q24 VLT operations continued to outperform its peers in New York, with its market share expanding to 43.3%

• Based on our observations, part of the Genting Casino 2 has reopened. We see potential for further reopening of casino floors ahead of the New Year festivities

• We raise 2024-26E earnings forecasts by 2-4%. Maintain BUY with our SOP-derived target price unchanged at RM3.30

VLT market share growth but weaker commercial casino performance

According to the New York State Gaming Commission, GENM’s video lottery terminals (VLT) in New York, including Resort World NYC (with Nassau OTB) and RW Hudson Valley, reported a 5.1% YoY net win growth in 4Q24 but trailing behind New York State’s overall growth of 5.7% YoY. For 2024, GENM’s VLT facilities outpaced the industry growth of 3.5% with a 4.1% YoY growth, with a 0.2ppts increase in market share to 43.5%. For commercial casinos, RW Catskills’ (owned by Empire Resorts) saw a modest 1% YoY increase in 4Q24 gross gaming revenue (GGR). Still, it declined 11% QoQ due to seasonal factors, resulting in a 2% decrease in total GGR for the full year 2024.

More gaming floor spaces to reopen before Lunar New Year festivities?

Based on our observation, GENM has reopened a partial of the former Genting Casino floor, accounting for less than 1/3 of the previous total floor space. We expect 2 possible scenarios before the Lunar New Year: 1) both Genting Casino 1 and 2 (refer to table 1) along with the connecting areas could progressively reopen, restoring about half of the former old casino floor space, or 2) status quo, with only Genting Casino 2’s existing space operational.

Maintain BUY with unchanged TP of RM3.30

We raise our 2024–26E earnings by 2–4% after factoring in our new in-house forex assumption and lower tax rate (from 30% to 26%) but partially offset higher associate losses dragged by Empire Resorts. We maintain our BUY call on GENM with an unchanged SOP- derived target price of RM3.30. GENM is trading at an undemanding 6.1x 2025E EV/EBITDA (or -2SD below its 10-year mean) with an 8% dividend yield. We see potential re-rating catalysts from securing the downstate NYC casino license, which is expected to be awarded by end-25. Key downside risks to our call include lower-than-expected win rates, a hike in gaming taxes, drag from key associates, and value-destructive related-party transactions.

Source: Philip Capital Research - 21 Jan 2025