CASINO closures in Malaysia, Singapore, the US, and the UK led to Genting Bhd seeing a 98% year-on-year (yoy) decline in earnings before interest, tax, depreciation and amortisation (EBITDA) for the first half of its 2020 financial year, according to TA Securities.
This follows Genting reporting a core net loss of RM196.5 mil for 1H20, attributed to the weaker than expected performance of its subsidiary Genting Malaysia Bhd, due to the casino closures.
“This was partially mitigated by increased contribution from the plantation division due to favourable crude palm oil prices,” said TA analyst Tan Kam Meng.
Subsidiary Genting Singapore (GenS) also saw its 1H20 revenue and EBITDA declining by 64.9% and 90.1% yoy to S$448.2 mil and S$62 mil respectively, with the “dismal performance” attributed to the circuit breaker imposed to contain the spread of Covid-19 in Singapore.
“1H20 gaming statistics were not meaningful due to the temporary closure of business. Currently, the casino is restricted to members only and capacity has been reduced by half.”
“Looking forward, management is sceptical that GenS will be able to turnaround in 2H20 if the borders remain closed,” said Tan.
The analyst also noted that there is no plan to delay the opening of Resorts World Las Vegas, which is scheduled to open in the summer of 2021.
“The group has spent a total of US$2.4 bil thus far for this US$4.3 bil project. As far as funding is concerned, the group has already secured the entire project financing for this project,” said the analyst.
TA maintains a buy call on Genting, until Covid-19 vaccines are developed successfully, and lowered its target price for Genting to RM4.89 from a previous RM4.90.
At 2.30pm, Genting’s shares were last done at RM3.60, up 6 sen, with 13.3 million shares traded. – Aug 28, 2020
