Maybank Research has cut its Earnings Per Share (EPS) estimates for Genting Malaysia by 58% in 2021 on a likely significant reduction in visitation following implementation of a new Movement Control Order (MCO) covering six Malaysian states.
Malaysian Prime Minister Muhyiddin Yassin outlined the latest MCO on Monday in response to rising cases of COVID-19, which passed 3,000 in a day for the first time last week. The MCO, currently scheduled to last two weeks from 13 to 26 January, covers six states – Penang, Selangor, Federal Territories, Johor, Melaka and Sabah – and includes a complete ban on interstate travel as well as a ban on travelling between districts within the six affected states.
In response, Genting Malaysia’s Resorts World Genting announced Wednesday it would operate at reduced capacity and with revised operating hours at some attractions for the duration of the MCO.
However, Maybank analyst Samuel Yin Shao Yang said the restrictions were likely to last considerably longer than just two weeks and look set to impact the usually thriving Chinese New Year period.
“The previous MCO that required RWG to shut operations was implemented on 18 March 2020 and was scheduled to last two weeks,” he said in a note.
“RWG only reopened three months later on 19 Jun 2020. As the number of new COVID-19 cases in Malaysia are a lot higher currently, we gather that the MCO in Selangor and Kuala Lumpur will last for a similar three months at least. This may cause RWG to forego the Chinese New Year peak season and raise doubts if Genting Skyworlds will open in 2H21.”
Yin noted that this latest MCO significantly impacts RWG due to the vast majority of day trippers, around 75% of the total, coming from Selangor and Kuala Lumpur.
As a result, Maybank Research has cut its estimates for visitor arrivals in 2021 from 18 million to 15 million and its EPS by 58% to 3.1 sen. FY22 EPS estimates remain unchanged although Yin warns of further downside risk should CNY be affected.
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