KUALA LUMPUR (May 6): Maybank Investment Bank (Maybank IB) on Friday cut Genting Malaysia Bhd's earnings per share (EPS) for the financial year ending Dec 31, 2022 (FY22) by 40% as the Omicron wave which began in Malaysia in February slows Resorts World Genting's (RWG) recovery.

Maybank IB analyst Yin Shao Yang said in a note that he understands that business at RWG has slowed from March due to the Omicron wave, and RWG has reopened only half of its about 10,000 rooms despite being allowed to reopen all from April 1.

"Hence, we cut FY22 estimated RWG visitor arrivals to 21 million (three million hotel guests and 18 million day trippers) from 24 million (six million hotel guests and 18 million day trippers) on RWG operating about 5,000 rooms in FY22," he said.

Yet, his FY23/FY24 EPS, which are based on 26 million to 27 million RWG visitor arrivals, are little changed (+0%/+1%).

As the number of new Covid-19 cases in Malaysia is falling, he expects RWG to reopen all 10,000 rooms from FY23 onwards.

His channel checks also revealed that few Malaysian VIPs are flying to Singapore, Phnom Penh and Manila to gamble compared to pre-Covid-19 levels.

"We gather that Malaysian VIPs are rebuilding their businesses and a weak ringgit is discouraging overseas travel. We believe this will put a floor of RWG's VIP volume which we estimate to average at RM4.4 billion per month in FY21," he said.

Also, he said his sources at the two Singaporean IRs also suspect that many Singaporean mass market gamblers are heading to RWG to gamble rather than the other way around due to the strong Singaporean dollar and casino entry levy in Singapore (S$150 for 24 hours or S$3,000 p.a.).

According to him, Singaporean hotel guests accounted for 5% of RWG visitor arrivals pre-Covid-19.

Including day trippers, he gathered that Singaporeans could have accounted for 10% of RWG visitor arrivals pre-Covid-19.

He maintained "buy" on Genting Malaysia but lowered its target price to RM3.30 from RM3.37.

"There could be another 53 sen of upside potential if Resorts World New York is converted into a full casino," he said.

At 11.09am on Friday, Genting Malaysia shares fell one sen or 0.32% to RM3.08, valuing the group at RM18.35 billion. Year to date, the counter has risen 5.84%.