China curbs won’t affect Genting Malaysia much: AllianceDBS

PETAING JAYA: AllianceDBS Research opined that ongoing efforts to curb gaming-related marketing activities of non-Chinese casino operators in China could restrict visitations of Chinese tourists regionally but not impact Genting Malaysia significantly.
On Monday China detained 18 employees of Australia’s Crown Resorts on suspicion of promoting gambling activities.
The detentions sent shockwaves in regional gaming counters due to concerns over the inflow of Chinese visitations to foreign casino operators. Genting Malaysia was not spared and its share price dropped 1.25% on Monday.
Genting Malaysia’s share price rose four sen yesterday to close at RM4.77 with some 7.58 million shares changing hands.
The research firm said it has relatively small exposure to Chinese VIPs, with Malaysians dominating visitations to Genting Highland.
Day trippers constitute about 70% of total visitations to Genting Highland, while Chinese tourists only made up about 3% of total visitations.
AllianceDBS maintains its “buy” recommendation for Genting Malaysia with a target price of RM5.00.

“We foresee three catalysts that will help re-rate the stock: (1) additional gaming capacity arising from the launch of Genting Integrated Tourism Plan (GITP), (2) weak ringgit to attract more foreign tourist visitations and encourage more visits from Malaysians, which could benefit Genting Malaysia, and (3) rising optimism on the group’s earnings outlook as the GITP launch could re-rate the stock closer to its intrinsic value,” the report said.
The group is on track to launch Sky Avenue and Sky Plaza shopping malls, and the new cable car station by end-2016, and Twentieth Century Fox World outdoor theme park by end-2017.
It expects the number of visitors to improve from 19 million in 2015 to 25 million by 2018, on track to meeting its target of 30 million by 2020. The higher visitations, coupled with the potential availability of 300 new gaming tables, are expected to drive its earnings.