KUALA LUMPUR (March 29): Kenanga Investment Bank Research has maintained its “overweight” rating on the gaming sector as leisure travel normalises post the pandemic.

In a note on Wednesday (March 29), the research house said Tourism Malaysia projects 16.1 million tourist arrivals in Malaysia in 2023, up 60% from 10.1 million in 2022.

It said that over the causeway, the Singapore Tourism Board expects a big jump in visitor arrivals to the island republic of 12 million-14 million this year compared to the 4.7 million recorded last year, underpinned by the return of international tourists, especially those from China.

Kenanga said this should benefit casino operators Genting Malaysia Bhd (outperform; target price [TP]: RM3.56) and Genting Singapore plc (not rated), as well as their parent company Genting Bhd (outperform: TP: RM5.86).

“Meanwhile, we project ticket sales of number forecast operators (NFOs) to return to 90% of pre-pandemic levels by end-2023.

“Largely domestically driven, their earnings are less directly exposed to external headwinds.

“Our top picks for the sector are Genting, being a proxy to the recovery of tourism in both Malaysia and Singapore, and Sports Toto Bhd (outperform; TP: RM1.95) given its double-digit dividend yields,” it said.

Meanwhile, Kenanga rated the risk of casino and NFO licences being revoked in Malaysia as low following the formation of a unity government led by a moderate Pakatan Harapan coalition.