Nomura maintains Buy rating for Genting Malaysia on strong US rebound

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A major surge in pent-up demand at Genting Malaysias three US casinos is seen as hugely encouraging for its short-term prospects, with Nomura Research maintaining a Buy rating despite the lengthening closure of the companys Malaysia IR, Resorts World Genting.

Launching a new monthly data review of Genting Groups US operations, Nomura analysts Tushar Mohata and Alpa Aggarwal noted that the importance of the groups US operations is especially higher now given the Malaysian casino remains closed due to a COVID-19 spike.

Those operations include the recently opened Resorts World Las Vegas (RWLV), which is 100% owned by Genting Berhad, Resorts World New York City (RWNYC) which is 100% owned by Genting Malaysia and Resorts World Catskills (RWC) which is 49% owned by Genting Malaysia.

Based on data for the three months to 30 June 2021, gross gaming revenue at RWNYC grew 27% quarter-on-quarter and 3% versus pre-COVID levels to US$230 million, while RWC reported GGR of US$50.6 million up 42% on the March quarter and just 2% down on pre-COVID.

No revenue figures are available for RWLV, which opened on 24 June, however Las Vegas Strip GGR for the three months was up 49% quarter-on-quarter and 8% versus the same period in 2019 to US$1.75 billion.

We believe the reopening momentum in US casinos has been strong so far, with GGR in most cases already above pre-COVID-19 levels, Nomura said.

This is all the more encouraging as inbound tourism to the US, especially from Asia, is still very limited. We believe US operations will remain a key pillar for Genting and Genting Malaysia earnings given the higher vaccination coverage in the US and the lower appetite for harsh lockdowns.

The analysts maintained a Buy rating for Genting Malaysia and Neutral for Genting Berhad.