Genting Malaysia shifts focus to premium mass customers

PETALING JAYA: Genting Malaysia Bhd is strategising to increase its mix of premium mass customers aside from raising overall visitor volumes under the Genting Integrated Tourism Plan, which will expand yields per customer in the longer term, according to PublicInvest Research.
It said the Resorts World Genting upgrading projects are on schedule, with foundational and civil works for the outdoor theme park commencing soon. The new 1,300-room hotel is also on track to commence operations by mid-2015.
Currently, most of the available rooms are under the three-star category (75% to 80%), and the group is targeting to increase its five-star category rooms to one third of total room supply by 2020.
"We understand that with the increased room supply, the group is looking to increase the proportion of rooms allocated to VIPs and premium mass customers. We believe this will expand yields per customer in the longer term, as the availability of better quality rooms attracts guests with a higher propensity to spend, without compromising on the group's bread-and-butter mass market segment," PublicInvest said in a note on Friday.
Meanwhile, it said Resorts World New York (RWNY) market share has maintained around 42% with seasonal fluctuations mirroring that of its closest competitor, Empire City in Yonkers.
"Therefore, we believe going forward, RWNY's growth should also normalise to 6% to 7% in line with the historical industry average, excluding competition from the upstate casinos which could materialise within the next four years.
"As the current market leader in New York's gaming market, it is thus imperative for the group to win a casino upstate in order to defend its position, regardless the not-so-attractive proposition presented such as upstate location, revenue sharing with local councils, stiff competition and localised gaming market," PublicInvest said.
It maintained a neutral rating for Genting Malaysia with unchanged target price of RM4.35, as it does not see any catalysts for the group in the near term.