Genting Malaysia’s US operations poised for stronger earnings in 2Q of 2024?

Jenny Ortiz July 26, 2024

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Genting Malaysia’s US operations poised for stronger earnings in 2Q of 2024?

The operations of Genting Malaysia in the United States are projected to deliver stronger earnings in the second quarter of 2024, according to a recent report by Phillip Capital Research. In 2023, the leisure and gaming business in the US accounted for approximately 18 to 20 percent of Genting Malaysia‘s total revenue and EBITDA, highlighting its significance within the group’s financial performance.??

Growth in New York’s video gaming market??

According to a report by The Star, Genting Malaysia’s New York-based video gaming machine (VGM) facilities, including Resorts World New York City and Resorts World Hudson Valley, have reported notable growth. In the second quarter of 2024, these facilities saw a combined net win growth of 5.5 percent year-on-year (y-o-y), outperforming New York state’s overall growth rate of 4.3 percent.

The standout performer was Resorts World Hudson Valley, which experienced a 19.4 percent y-o-y increase in net wins. This strong performance has led to an expansion of VGM’s market share by 0.6 percentage points y-o-y.

Challenges at Resorts World Catskills??

Despite these gains, Resorts World Catskills owned by Genting Empire Resorts faced a decline in gross gaming revenue (GGR) of about 8 percent y-o-y in the second quarter of this year. This drop was attributed to reductions in slot and table game GGR.

With GGR remaining flat quarter-on-quarter, Empire Resorts’ EBITDA for 2Q24 is expected to be similar to the first quarter, at around $3 million (€2.7 million). However, the overall performance of Genting Malaysia’s US operations is anticipated to improve, maintaining their crucial contribution to the group’s revenue and EBITDA.

Positive developments in New York’s casino licencing??

Phillip Capital Research also noted positive developments regarding the New York State Gaming Facility Location Board’s updated timeline for the request for applications for three new casino licences. This update is a potential catalyst for re-rating Genting Malaysia’s stock. The application deadline is June 27, 2025, with a decision expected by December 1, 2025, and the licence to be awarded by December 31, 2025. This timeline provides a clearer path for Genting Malaysia’s future operations in New York, potentially adding significant EBITDA contributions in the coming years.

Prospects and investor recommendations??

Given these insights, Phillip Capital Research maintains a “buy” recommendation for Genting Malaysia, with a target price of RM3.45. The brokerage highlights Genting Malaysia’s attractive 6.8 percent dividend yield and suggests that investors accumulate shares during periods of price weakness. The stock is considered to trade at an undemanding 6.6 times the estimated 2025 enterprise value-to-EBITDA, making it an appealing investment in the leisure and gaming sector.?

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