Brokerage firm Nomura has slammed the Malaysian government’s decision to increase taxation for its only casino Resorts World by ten per cent, double what the market was expecting.
It said the increase would ‘diminish the investment appeal of the gaming sector.’
It said: “Given Genting Malaysia’s share price correction of nine per cent since the beginning of October, we believe the market has already more than factored-in the bear case scenario of a 5-percentage point increase in gaming tax. We predict aMYR600m to MYR700m (US$144m to US$168m) impact on Genting Malaysia EBITDA and net income for fiscal years 2019 and 2020, which would offset a big chunk of the earnings growth expected from Genting’s substantial capital expenditure into new capacity over the past five years.”
Genting Malaysia has committed to spending MYR10.5bn on revamping Resorts World Genting as part of its ten-year Genting Integrated Tourism Plan (GITP).