Slowdown of China’s economy threaten Genting

Genting Berhad and Genting Malaysia, at risk from fewer Chinese tourists, financial holdings company Nomura warns.

Original story by Ben Blaschke for Inside Asia Gaming

A slowdown of China’s economy is seen to impact overall Chinese tourists to Malaysia and will impact Malaysian casino giant Genting Berhad and its subsidiary Genting Malaysia. 

Analysts from Nomura estimate that tourist numbers from China have been lower than 30% of pre-COVID numbers in recent months.

According to a Nomura analyst focusing on China, Dr. Ting Lu, in the actual warning: ‘worsening downward spiral of major activity’ coupled with Beijing’s lacking response to the trend prompted him to lower his GDP forecast for China from 5.5% to 5.1% this year. He also lowered his forecast for the same country next year. 

Nomura’s Tushar Mohata and Alpa Aggarwal, in the same IAG report, likewise elaborated that the situation in China will likely lead to missed tourist turnouts for ASEAN casinos. 

“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% to 30% of the pre-COVID levels in the last couple of months,” the two analysts wrote.

Genting Malaysia also recently opened King’s Park Genting Highlands. The mega development is a 2Km-wide commercial center which will house about 260 shops, outdoor activity centers, and an integrated entertainment hub. The development is part of Genting Highlands, which is projected to receive 53 million visitors by 2026.

The two analysts emphasized that the company’s EBITDA growth from 2022 to 2024 has been canted on Chinese arrivals. Genting and Genting Malaysia’s resorts assets both account for more than half of FY23 estimates. 

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