Genting Bhd (GENT) posted a net loss of RM168.7m in 4QFY22, dragged by higher depreciation cost, unrealized foreign exchange losses and impairment losses. Stripping out non-operating items, GENT’s FY22 core net profit came in below our expectation at 93% of full-year estimates but within market expectation. The discrepancy in our forecast was mainly due to lower-than expected contribution from Genting Malaysia (GENM). We have lowered our FY23F earnings forecast for GENM but raised our estimates on Genting Singapore. As a result, we revise up our FY23-24F earnings projections by c.4%. Our SOTP-based TP remains unchanged at RM5.80. Maintain Outperform. A final dividend of 9.0sen per share was declared, bringing total dividend for FY22.
- 4QFY22 revenue rose 32% YoY. Leisure & hospitality segment posted a 59% growth in revenue, mainly driven by higher contribution from Malaysia and Singapore. Resorts World Sentosa gained further momentum in 4QFY22 with the recovery in international travel, hence more than doubling its revenue to RM1.8bn. Meanwhile, revenue from Malaysia increased by 66% YoY. Plantation and power revenue fell 25% YoY and 18% YoY respectively however, due to lower palm product prices and scheduled outage.
- Net loss. Despite the strong performance posted by Genting Singapore, the group sagged into a net loss due to higher depreciation charges, foreign exchange losses and impairment losses. Depreciation jumped 40% YoY due to the commencement of operations in Resorts World Las Vegas while the translation losses were due to USD0-denominated borrowings. Stripping out these non-operating items, FY22 core net profit stood at RM590m, compared to a core net loss of RM1.4bn in FY21.
- Outlook. The reopening of China’s international borders should benefit RWS with the return of Chinese tourists, which used to account for almost a third of its gross gaming revenue prior to the pandemic. Likewise, Resorts World Genting should also see a gradual recovery in visitorship. However, in view of weaker consumer sentiment due to monetary policy tightening that could potentially lead to a global recession, we believe visitorship is not likely to revert to pre-pandemic levels anytime soon. Meanwhile, we are still projecting Resorts World Las Vegas to remain loss-making in FY23F as the increase in revenue would not be sufficient to cover depreciation and interest costs.
Source: PublicInvest Research - 24 Feb 2023
