Genting safe from Brexit effect as Malaysian developments spur growth

Genting Brexit Malaysia
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Genting Malaysia has announced that its Malaysian operations be able to cushion its UK casinos’ earnings from any Brexit impact.


[dropcap]I[/dropcap]nvestment researchers AllianceDBS said the group’s UK operations contribute less than 10 percent of its earnings before interest, tax, depreciation and amortization (EBITDA).

“Brexit should not be a key drag. Although the group has overseas operations covering the UK and US, we expect the group’s operations in Malaysia to remain its key income contributor, accounting for more than 80 percent of the group’s EBITDA going forward,” it said in a report yesterday.

Genting Malaysia has 43 casinos in the UK, including Resorts World Birmingham, which started operation in October last year.

AllianceDBS said the launch of Resorts World Birmingham was expected to increase forward earnings by 2 – 3 percent.

The research team raised its financial year 2017 and 2018 earnings forecast on Genting Malaysia by 4 percent and 7 percent, backed by the potential 8 percent in visitor growth per year to Resort World Genting (RWG) between 2016 and 2018.

“We believe that our assumption of 8 percent visitor growth per annum to RWG between 2016 and 2018 is conservative,” AllianceDBS said.

The group estimate that Genting Malaysia’s developments are on track, quoting its recent meeting with the management.

It said: “Management has reaffirmed our investment thesis that the group is on track to launch Sky Avenue & Sky Plaza shopping malls, and the new cable car station by end-2016, and the 20th Century Fox world outdoor theme park by end-2017.”

The makeover will also involve 300 new gaming tables situated in Sky Plaza, more than 50 percent from its current estimate of 550 tables.

“As such, we have assumed Genting Malaysia’s gaming table capacity to increase progressively from 550 to 800 tables by 2018 in our earnings model,” AllianceDBS added.

Indeed, the group believe Genting Malaysia is on track to meet its target of 30 million visitors by 2020.

“The increased visitations, coupled with the availability of 300 new gaming tables, are expected to drive its earnings,” it said.


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