KUALA LUMPUR: With limited information over the launch of the SkyWorlds outdoor theme park, Genting Malaysia Bhd could be carefully timing its opening as it considers the risk of Malaysia returning into lockdown, said TA Securities Research.
“Management shared limited information on its SkyWorlds theme park, not even the date for the grand opening. According to management, the group has invited guests and employees to preview the park, reassuring analysts that there have been no technical issues,” the research firm said in a report following a conference call.
In addition, the entertainment operator could be waiting the establishment of vaccinated travel lanes with key markets like Singapore and Indonesia before it opens the facility.
The opening of the much-delayed theme park has been highly anticipated as Genting Malaysia embarks on an earnings recovery in Q4 after recording core losses of RM1bil in 9MFY21, resulting from the closure of its casino from June 1 to Sept 29.
The losses would have been wider but a decent performance in the group’s US and UK operations partially mitigated the impact while losses from associates narrowed year-on-year due to a lower share of losses from Empire as restrictions eased in the US.
The losses were within analysts expectations, accounting for 94.5% of TA Securities’ full-year estimate and 85.8% of that of consensus.
“This was within expectation as we project a significant loss reduction in 4Q21 following the resumption of casino operations since 30 September and upliftment of interstate travel ban in mid-Oct,” said TA Securities.
Meanwhile, Genting Malaysia’s 49% owned associate Genting Empire Records has won a licence to operate mobile sports betting in New York.
However, Genting Malaysia’s management has said it is premature to discuss future profitability given the highly competitive market as eight other competitors have also won the licence.
TA Securities noted that Genting Malaysia’s capital investment into the business is insignificant.
On its stock recommendation, the research firm upgraded Genting Malaysia to “hold” with an unchanged discounted cash flow valuation of RM3.19 based on a discount rate of 11.7%
“Note that GENM’s valuation has almost fully recovered to its pre-pandemic levels (ie:RM3.18 @ 31 Dec 2019). Hence, the 12% growth in share price YTD will pause until the market is certain that the worst is really over for GENM, in our opinion,” said the research firm.