Banking group Nomura said in a Tuesday memo it was sustaining its view that Malaysia’s only licensed casino resort complex, Resorts World Genting (pictured), could see a “gradual recovery” in the coming quarters, thanks in part to play by locals, even if Covid-19 meant a crimp on foreign customers.
The property – run by Genting Malaysia Bhd – had seen a rebound in customer visits during the seasonal holiday period at the end of 2020, said Nomura, following an earlier dip in volume in October, due to a tightening at that time, of Malaysia’s Covid-19 countermeasures.
Nomura expected a “sharp inflection” point for gaming operations at Resorts World Genting in financial year 2022, with the expected opening of the complex’s outdoor theme park. The latter is a long-awaited attraction flagged as likely to draw extra crowds to the resort.
Operations at Resorts World Genting – the group’s main money maker – were suspended from March 18 until June 19, as part of national efforts to contain the novel coronavirus associated with the Covid-19 infection. Subsequently the complex has been running at reduced capacity as a safety precaution.
Third-quarter earnings before interest, taxation, depreciation and amortisation (EBITDA) at Resorts World Genting had reached “79 percent of year-ago levels”, at an EBITDA margin of 36 percent, Nomura analysts Tushar Mohata and Alpa Aggarwal highlighted in their latest memo.
“This demonstrates local demand resilience as movement curbs were lifted in third quarter 2020 (70 percent of Malaysian revenue historically has come from locals), and the effect of cost rationalisation undertaken by the group,” Nomura remarked.
“Casino wins in third quarter 2020 were at 74 percent of third-quarter 2019 levels with the VIP segment being more resilient. While visitation dipped after October movement curbs, it rebounded towards year-end holidays,” the Nomura analysts noted.
As well as having its Malaysia operation, Genting Malaysia runs casinos in the United States, the Bahamas, the United Kingdom and Egypt.
In its Tuesday commentary, Nomura remarked that the firm’s overseas businesses in the U.S. and U.K. might have “weaker” fourth-quarter results due to respective properties in those markets facing either temporary closure or reduced business hours.
But those markets could recover in summer of 2021, as they were also the “first markets with [Covid-19] vaccine access”, the analysts remarked.