Brokers' take: Analysts optimistic about Genting's expansion in the US, Japan

ANALYSTS are optimistic about Genting Bhd's expansion plans in Japan and the US, expecting the casino group to benefit when economies reopen amid a ramp-up in local and regional Covid-19 vaccination programmes.

Genting Singapore and its joint-venture (JV) partner will likely win the RFP process for the Yokohama integrated resort (IR), which should double its earnings in the long run, said Maybank IB Research in a note on Tuesday.

The research team raised its target price on Genting Bhd to RM6.26 from RM5.68 previously, as it estimated that earnings from the Yokohama IR in its first full year of operations in FY2028 to be RM2.90 billion (S$941.9 million), if Genting takes 50 per cent of the shares in the JV. Genting previously reported a core net loss of RM365 million in FY2020 amid the Covid-19 pandemic; prior to that, it reported a core net profit of RM2.16 billion in FY2019.

Maintaining its "buy" call on the stock, Maybank also noted that Genting's share price is likely trading at a 55 per cent discount to its stock option plan (SOP) per share. The research team said if share prices react similarly to when Genting Singapore won the Resorts World Sentosa bid in 2006 and narrow the discount to its SOP per share by 40 points to 15 per cent, Genting's share price may exceed RM10 after it wins the Yokohama IR bid.

Additionally, the casino group's Resorts World Las Vegas, which will likely launch in June 2021, should further establish it as a global player, said UOB Kay Hian in a research note on Tuesday, while maintaining its "buy" call on Genting Bhd with a target price of RM6.65.

The research team is also positive on Resorts World New York City's chances of securing a full-scale gaming licence, after the exclusivity period of the city's upstate casinos ends in 2023. The completion of hotel Hyatt Regency JFK at the IR in summer 2021 should also further boost its growth, UOBKH added.

The research team noted, however, that the Las Vegas establishment may face challenges on initial returns since it is the priciest IR ever built on the Strip, on top of ongoing operational costs and competition from other casinos in the area.

Nevertheless, Resorts World Las Vegas will likely aid the group's long-term masterplan of tapping into the US gaming market, by integrating the group's operations in Las Vegas, New York City and Catskills, UOBKH said.

It added that the establishment, which is Genting's fifth major investment in the US, will eventually thrive in the Vegas Strip over the longer term, as visitation growth should be boosted by the Allegiant Stadium and Las Vegas Convention Centre.

Shares of Genting Bhd were trading at RM5.12 as at 11.21am on Tuesday on Bursa Malaysia, up RM0.06 or 1.2 per cent.