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Genting SkyWorlds will accelerate GENM business recovery, says RHB Research

KUALA LUMPUR: Genting SkyWorlds is expected to accelerate Genting Malaysia Bhd's (GENM) business recovery as it is expected to be a crowd puller and provide a new income stream and benefitting other facilities within Resorts World Genting (RWG).

RHB Investment Bank Bhd (RHB Research) said Genting SkyWorlds will be operational on February 8, albeit a 20 per cent discount for ticket prices during the soft launch as some attractions were undergoing the final commissioning process and still unavailable to the public.

"The theme park will likely operate at about 50 per cent capacity (full capacity: 20,000 visitors at a time) initially due to the standard operating procedure (SOP) in place.

"Assuming 10,000 visitors a day, we estimate the theme park alone could contribute annual earnings before depreciation and amortisation (EBITDA) between RM210 million and RM290 million."

RHB Research said RWG's business is on track to recovery in the fourth quarter of 2021, despite a slight disruption (landslide) in December.

"We believe RWG's business will continue to recover strongly, especially once SkyWorlds opens as it should be a crowd puller and benefit other facilities within RWG through higher footfall."

Meanwhile, the bank-backed research firm said GENM's gross gaming revenue (GGR) recorded from Resorts World New York City (RWNYC), and Resorts World Catskills (RWC) stood at about 90 per cent to 95 per cent of pre-pandemic levels, despite the Omicron variant in December 2021.

On Genting Hong Kong's (GENHK) recent announcement on potential cross defaults of US$2.8 billion, the research firm said it would unlikely affect GENM as it did not have any holdings in the former, and its minority shareholders were likely to reject any potential proposal that is related to the bailing out of GENHK.

RHB Research has retained a Buy call for GENM with a target price of RM3.58 as the stock continues to be a direct beneficiary of tourism recovery play.

"The imminent opening of Genting SkyWorlds will create excitement among visitors and can potentially lead to higher footfall to RWG."

Key risks include a slowdown in Covid-19 recovery, change in luck factor and regulatory risks.

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