KUALA LUMPUR (June 19): Affin Hwang Capital Research maintained its "sell" rating on Genting Malaysia Bhd (GenM) at RM2.68 with an unchanged target price (TP) of RM1.90 after the gaming group said it was resuming gambling operations in Malaysia and the UK, while US operations will remain closed.

In a note today, the research house said the re-openings did not come as a surprise, as it had assumed that all GenM's gaming operations would resume by before end of 3Q20.

"Despite the resumption of activities, the social distancing requirement will put a cap on its current capacity.

“We believe that the visitation numbers will still remain under pressure despite more facilities re-opening soon, as Malaysia has yet to open its borders to foreign tourists.

“Based on our estimates, around 20% of the visitation in 2019 was driven by foreign tourists. Given that the chances of a Covid-19 second wave occurring is still real, the Malaysian government is unlikely to take the decision to reopen its borders lightly,” Affin Hwang said.

With the opening of the new outdoor theme park expected for 3Q21, the research believes that it would take at least 2-3 years before the visitation numbers recover to 2019 levels.

Key risks include reduction in gaming taxes, additional tax incentives and the approval to expand its gaming capacity, it added.

Meanwhile, Resorts World Genting reopened today with enhanced safety measures in place to ensure the health and safety of all its guests and employees.

GenM said entry to Sky Casino in SkyAvenue and Genting Club in Genting Grand Hotel will be limited to Genting Rewards members due to limited capacity.

It also said the Awana Skyway cable car and Genting express buses will resume operation.

The casino and hotel operator’s Resorts World Kijal and Resorts World Langkawi reopened yesterday.

At 11am, shares GenM dipped 0.37% or 1 sen to RM2.67, while its parent Genting Bhd shed 0.22% or 1 sen to RM4.45.