Genting Malaysia shares spike ahead of reopening

by Noah Taylor Last Updated
Fitch provides outlook on Genting’s portfolio

Shares in Genting Malaysia spiked four per cent on the back of the central government announcing the easing of some COVID-19 restrictions.

Asia Gaming Brief reports that Genting’s Resorts World casino has been closed since the end of May as the country reported a rising number of coronavirus cases.

The government announced that restrictions will be eased in eight states from August 10 for people who are fully vaccinated.

The states include Pahang, which is home to Resorts World Genting and home to about half of the total population.

The measures will allow dining in at restaurants, outdoor individual sports and interstate tourism.

The Kuala Lumpur capital region and Selangor are not included as case numbers remain high.

The government said the easing of restrictions was made possible by higher vaccination rates, which are reducing the impact of COVID-19 on the health system.

As of August 8, about half of the entire population had received at least one dose of the vaccine.

In a recent note, Malaysia expected to achieve 70 per cent vaccination by the end of 2021.

The analysts have Genting Malaysia among their top picks on expectations for a boost from pent-up demand following restrictions.

The easing of restrictions comes despite Malaysia recording a seven-day average for COVID-19 infections of more than 18,000.

Genting has not yet indicated whether its resort will open.

When the closure was announced, analysts at Maybank said they expected the closure to last for three months.

However, they didn’t see the shutdown to be as harmful as in 2020 as other properties around the world, including the US, are opening and able to cushion the impact.

Malaysia poised for swifter bounce back than Singapore and Macau

Fitch Ratings analysts have predicted that gaming markets more reliant on local visitation will continue to recover faster from the impacts of the coronavirus pandemic and be able to weather the effects of on-off closures due to local infections.

Fitch Ratings said it maintained a negative outlook for a majority of its “rated gaming universe” because of the pandemic’s severe impact to casino operators and uncertainty regarding the sector’s recovery trajectory.

Discussing jurisdictions in the Asia-Pacific, Fitch noted that for the Macau casino market, although the city had an almost universal quarantine-free travel bubble with mainland China, current continued travel restrictions between Hong Kong and Macau were a “headwind”.

The institution said it was forecasting monthly revenue declines of 50 per cent to 60 per cent, year-on-year, through the first half of 2021, with accelerating growth in the second half, “led primarily by the premium mass segment.”

Fitch Ratings noted: “The eventual easing of travel to Hong Kong and potential availability of a vaccine drives our assumption for a strong second half 2021 performance relative to first half 2021.”

The financial institution observed that while Macau’s current six gaming licences expire in June 2022, the city’s chief executive Ho Iat Seng had a “multi-year extension option” in relation to the current rights.

“Fitch continues to believe the concession rebid process will be pragmatic,” said the credit rating agency, referring to an anticipated new public tender associated with the expiry of the current Macau gaming rights.

Fitch Ratings expects casino revenues in Malaysia, where Genting Malaysia runs the country’s only licensed gaming complex, Resorts World Genting, near the capital Kuala Lumpur, to recover gradually to 75 per cent 2019 levels in 2021, “aided by new attractions”, understood to be a reference to a long-awaited new outdoor theme park and the country’s larger and domestic focused market relative to neighbouring Singapore.

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