Nomura analysts believe that Genting Berhad in Malaysia could be hit by the dwindling Chinese economy with esimates that visitor levels to the company’s Resorts World Genting mountain top resort only reaching 30 per cent of pre-pandemic levels.
Nomura’s Dr Ting Lu said a downgrade of his GDP growth forecast for China was due to a ‘worsening downward spiral of major activity data and Beijing’s tepid response to date.’
Nomura’s Tushar Mohata and Alpa Aggarwal said: “Note that 3.1 million Chinese tourists visited Malaysia in 2019, and while data from Malaysia is not readily available, we think Chinese tourist numbers have not been more than 25 per cent to 30 per cent of the pre-COVID levels in the last couple of months. A slowdown and negative wealth-effects in China are likely to lead to missed tourist arrivals/earnings expectations for ASEAN casinos.
“Both Genting and Genting Malaysia are vulnerable. For Genting, Malaysia-Singapore resorts account for 67 per cent of FY23 EBITDA estimates, and for Genting Malaysia, Malaysia resort accounts for 70 per cent of FY23 EBITDA estimates.”
“While Resorts World Genting (in Malaysia) has been more domestic focused versus Resorts World Sentosa (in Singapore), the growth in EBITDA from FY22 to FY24 is largely premised on Chinese arrivals.”