KUALA LUMPUR: Genting Malaysia has introduced a new mass gaming floor, Genting Casino, at its flagship integrated resort, Resorts World Genting, as renovations continue on the closed Circus Palace and Hollywood casinos.
According to a note from Maybank Investment Bank (Maybank IB), Genting Casino was operational during a site visit on December 30.
The new gaming floor features two areas with distinct themes: one similar to the existing Sky Casino and another with a traditional Chinese design. The latter includes 36 conventional gaming tables and a significant number of lower-yielding slot machines and electronic tables.
Despite the addition, the investment bank said that the new floor is considerably smaller than the Circus Palace and Hollywood mass gaming areas. The estimated floor space of Genting Casino is between 10,000 and 20,000 square feet, a fraction of the size of the former gaming floors.
"The opening does not compel us to revise our earnings estimates upwards," it noted.
The investment bank said that while it adds capacity, it accounts for less than 10 per cent of the total capacity when Circus Palace and Hollywood were fully operational.
It estimate a 20 per cent annual earnings uplift and an 8.0 per cent increase in its discounted cash flow target price (DCF-TP) to RM2.95 if the renovations are completed and the gaming floors reopen fully.
Renovations for Circus Palace and Hollywood are ongoing, with Genting Malaysia management confirming plans to reopen them eventually, though no specific timeline has been provided, according to the note.
Following Genting Malaysia's third quarter of 2024 results, the investment bank reduced its long-term mass market gross gaming revenue (GGR) forecasts by 25 per cent, from RM3.1 billion (FY23A) to RM2.8 billion–RM2.9 billion annually, due to the delayed reopening of the key gaming floors.
At Sky Casino, which has been accommodating mass-market gamblers during the renovations, the investment bank reported thinner crowds as the year-end school holidays concluded. Additionally, the casino has replaced many conventional gaming tables on the first floor with lower-yielding but higher-margin slot machines and electronic tables, likely to optimise staff costs post-peak season.
Despite these challenges, Maybank IB maintains a positive outlook on Genting Malaysia's valuation, reiterating a "BUY" call with a DCF-TP of RM2.73.
"We continue to believe that Genting Malaysia's valuations are attractive. Key risks are more related party transactions involving Empire Resorts and negative outcomes from its US$600 million lawsuit by RAV Bahamas," it said.