KUALA LUMPUR: Casino operators may see a sustainable recovery, supported by the restoration of global flight capacity and the visa-free travel agreement between China and both Malaysia and Singapore, Hong Leong Investment Bank Bhd (HLIB Research) said.
The research firm anticipates continued earnings recovery for Genting Singapore (GENS) and Genting Malaysia (GENM) for the second half of 2024 (2H24), benefiting Genting Group, driven by the ongoing rebound in tourist numbers.
"This recovery is supported by the restoration of global flight capacity and the 30-day visa-free travel agreements between China and both Malaysia and Singapore.
"For perspective, Malaysia and Singapore target to achieve 2024 foreign tourist arrivals of 27.3 million and 15–16 million, respectively," it said.
It added that Resorts World Genting (RWG) and Resorts World Sentosa (RWS) will benefit from the recovery of Chinese tourists, which are a crucial client segment for the gaming industry.
While Malaysia and Singapore have shown resilience as destinations for Chinese travellers in 2023, it's important to note that the travel volumes are still 48 per cent and 47 per cent of 2019 levels, respectively, indicating further potential for recovery.
As for TauRx Pharmaceuticals (Genting Group's 20.4 per cent- owned associate), HOUB Research said the pharmaceutical company has achieved success in its third clinical trial for the drug hydromethylthionine mesylate (HMTM).
Based on the Wall Street Journal report published in 2015, TauRx could be valued at US$15 billion if it is listed on the Nasdaq following the successful completion of its third clinical trial.
"It is important to note that the "drugs that slow Alzheimer's disease progression" market was devoid of competitors back in 2015.
"However, the FDA had recently approved two drugs in the related field, namely Leqembi (by Biogen and Eisai) in July 2023 and Kisunla (by Eli Lilly) in July 24. Assuming three of the drugs capture the addressable market equally, this could imply TauRx is worth U$5 billion or GenT's stake could be worth US$1 billion, which is approximately 25 per cent of the current market cap."
As for the new fund offer (NFO), Sports Toto Bhd's NFO segment is likely to normalise in the fourth quarter of 2024 (Q4 2024) after benefiting from seasonally stronger sales in Q3 2024.
The firm maintained an 'overweight' call on the sector.