A recent surge in COVID-19 cases in Genting Malaysia’s key markets of Malaysia, the UK and United States is expected to see reduced earnings in the final quarter of 2020, negating strong recovery trends seen in the three months to 30 September.
Genting Malaysia reported its third quarter results late Thursday, with local demand at flagship Malaysia IR Resorts World Genting keeping Adjusted EBITDA in the black at MYR302.5 million (US$74.2 million). A net loss of MYR726.3 million (US$178.6 million) was attributable to one-off costs such as staff redundancies, impairment of assets and tax deferrals.
In September, a research report by a team of Nomura analysts suggested Resorts World Genting was on track for a strong finish to 2020 with visitation up to 40,000 visitors per day and the 50% of hotel rooms open at the time reporting average occupancy of 90% since reopening in June.
However, Nomura analysts Tushar Mohata and Alpa Aggarwalare are now predicting a substantial decline in 4Q20 on the back of a new Movement Control Order implemented across parts of Malaysia from last month and similar measures in New York and the UK.
“Since the new movement curbs hit in mid-October, visitation is now down again to 15,000 a day,” they said.
“That, along with weaker traffic in casinos in the UK and US will likely lead to a dip in 4Q20 earnings.
“UK casinos were open since mid-August, but have been closed again due to a resurgence of COVID-19 cases in November. The casino was doing ~70% of pre-COVID revenues before closure.
“Resorts World New York City only opened for three weeks in 3Q20, but since November, operating hours have been reduced and so the wins per machine are also lower.”
Nomura said it has widened its expected FY20 losses for Genting Malaysia by 24% to MYR1.59 billion (US$390.2 million) but raises its FY20 earnings forecast by 56% to a net profit after tax of MYR233 million (US$57.2 million).
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