Genting Bhd EBITDA to fall 70%, analyst says

The drop in visitors to Resorts World Sentosa and Resorts World Genting will hit earnings hard, Maybank IB forecasts.

Malaysia.- Genting Bhd is likely to see its financial-year 2020 earnings before interest, taxation, depreciation and amortisation (EBITDA) fall 70 per cent year-on-year, according to analysts from Maybank IB Research.

The drop is predicted mainly due to lower Resorts World Sentosa and Resorts World Genting visitor arrivals owing to the Covid-19 outbreak. researcher Samuel Yin Shao Yang said.

He said the two venues typically accounted for between 80 per cent and 90 per cent of Genting Bhd group earnings.

As for the future, he said: “We forecast financial-year 2022 EBITDA to grow by a more gradual 38 per cent year-on-year, as Resorts World Genting’s outdoor theme park opens and ramps up”.

He noted that Resorts World Sentosa in Singapore had, in earlier trading periods, been strong in the local market so could be more independent of international tourism than other venues.

Maybank said: “The main risk to Genting Bhd’s profitability, and [its] environmental, social and governance credentials, continues to be the recurrence of related-party transactions by Genting Malaysia, with the latest being the acquisition of 49 per cent of loss-generating Empire Resorts [Inc] and increasingly stricter regulations being imposed on Resorts World Sentosa.”

“We forecast Empire Resorts to contribute more than MYR100 million [US$24.2 million] in losses per annum.”