Net loss narrows for Genting Malaysia in 3Q22 but recovery subdued – IAG

Genting Malaysia reported a net loss of MYR8.2 million (US$1.82 million) in the three months to 30 September 2022, narrowed by 97% from the MYR307 million (US$68.3 million) loss reported a year earlier and from the MYR42.3 million (US$9.41 million) loss reported in Q2.

However, the company’s recovery trajectory remained more subdued than expected – primarily on slower recovery at its Malaysian flagship Resorts World Genting (RWG).

Despite both revenue and EBITDA improving in the quarter, Nomura analysts Tushar Mohata and Alpa Aggarwal said the gains were primarily made at Genting Malaysia’s US properties, while RWG “likely did not deliver the expected quarter-on-quarter jump in revenue/EBITDA despite adding more hotel rooms in the quarter and seeing almost full occupancy.”

RWG suffered from higher operational costs and a deferred tax charge, they added.

Nevertheless, group revenue for the quarter climbed threefold year-on-year, and up from MYR2.18 billion (US485 million) in the June quarter, to MYR2.27 billion (US$505 million) in Q3. This included RWG revenue of MYR1.40 billion (US$311 million), improved from MYR1.31 billion (US$291 million) in Q2.

US revenue, comprising Resorts World New York City and Resorts World Catskills, grew 17% year-on-year to MYR424.9 million (US$94.5 million) while revenue in the UK fell by 3% to MYR393.9 million (US$87.6 million ).

Group-wide Adjusted EBITDA of MYR647.1 million (US$144 million) compared with EBITDA of just MYR57.7 million (US$12.8 million) a year earlier and MYR619.5 million (US$138 million) in Q2, although RWG saw its Adjusted EBITDA fell by 3% quarter-on-quarter to MYR445.0 million (US$99 million).

Genting Malaysia said it expects short-term recovery to be driven by domestic demand with international tourism continuing to face headwinds.

“While international tourism is anticipated to continue improving, ongoing global economic headwinds and pandemic management measures in certain countries could impact demand for international travel,” it said. “Consequently, the recovery of the regional gaming market could face some setbacks.

“Nevertheless, the Group remains cautiously optimistic on the near-term outlook of the leisure and hospitality industry and remains positive in the longer-term.

“In Malaysia, the Group is encouraged by the increase in visitation at RWG following the reopening of the national borders and the relaxation of COVID-19 restrictions in the region. In view of the potential challenges in the operating environment, the Group will continue to closely monitor risks and demand and react accordingly. The Group remains focused on managing yield and profitability at RWG and will continue to actively market RWG products and services to its membership base and other segments in Malaysia and regionally. At the same time, the Group will continue placing emphasis on operational resilience and cost discipline.”

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