PETALING JAYA: Numbers forecast operators (NFOs) are expected to see an earlier revenue recovery to pre-movement control order (MCO) levels compared with their casino counterpart, due to their closer proximity to customers, zero reliance on foreign tourists and fewer standard operation (SOP) measure constraints, according to CGS-CIMB.
On the whole, it is keeping an overweight call on the Malaysian gaming sector.
The research house noted that gross NFO sales for Berjaya Sports Toto have gradually picked up to about 75% of pre-MCO levels since it reopened its outlets on June 17.
“We gather that the recovery has been gradual as the reopening of outlets in Sarawak and Sabah were delayed initially, but all outlets nationwide are now open.
“While Magnum has not disclosed the exact quantum of recovery of its gross NFO sales, we believe it is similar to Berjaya’s,” it said
In its view, CGS-CIMB projected that gross NFO sales may gradually recover to pre-MCO levels only by year-end, due to the SOP measures in place at all outlets and potentially lower disposable incomes of punters.
While illegal operators had monopolised the market during the MCO and conditional MCO period, it noted that they had used draw results from Cambodia due to the closure of Malaysian NFOS, which may have hindered their efforts to recruit new players.
In regard to casino operators, the research house has gathered from Genting Malaysia that its Resorts World Genting’s visitor arrivals have been quite decent after it was allowed to reopen on June 19 on a staggered basis.
“During the first two weeks of July, visitor arrivals had recovered to more than 50% of pre-movement control order (MCO) levels. RWG has increased the number of hotel rooms available from 2,000 at initial reopening, to 4,000-5,000 in recent weeks, to cater to the higher demand,” it said.
According to Genting, its SkyCasino and Genting Grand casinos are open and operating at roughly 50% of normal capacity due to the SOPs implemented.
CGS-CIMB pointed out that entry to the casinos is still only open to Genting Rewards members, but it noted that these members traditionally make up most of the casino revenue anyway.
“Typically, some 70-80% of Resorts World’s visitor arrivals are locals, and there has been pent up demand for domestic tourism and gaming post-MCO,” it said.
“Hence, we believe RWG’s business will perform better than other casinos in the region that are more dependent on international visitors.”
The research house said both the mass and VIP gaming segments are seeing decent recovery, with an opportunity for Resorts World to capture demand from the latter, as local VIP gamblers are not able to travel abroad currently.
Genting Malaysia said it is uncertain over the reopening dates of its UK and US operations, given the still relatively high daily number of new Covid-19 cases in those markets.
With that, CGS-CIMB has ‘add’ calls on Genting Bhd with a target price of RM5.60, Berjaya Sports Toto with a target price of RM2.45, Genting Malaysia with a target price of RM2.75 and Magnum with a target price of RM2.30.
Gross NFO sales for Berjaya Sports Toto have gradually picked up to about 75% of pre-MCO levels since it reopened its outlets on June 17.
