Malaysia gaming to recover in late of 2023 amidst policy and regulatory risk–bank

Major Malaysia-based bank Hong Leong Investment Bank (HLIB) cites rising tourism to the country to drive the recovery of the gaming sector for the remainder of 2023.Major Malaysia-based bank Hong Leong Investment Bank (HLIB) cites rising tourism to the country to drive the recovery of the gaming sector for the remainder of 2023.

Original story by Asia Gaming Brief with details from The Star

In the original article for MY-based The Star, HLIB said that casino operators like Genting Berhad and Genting Malaysia Berhad are expecting the influx of tourists will boost income. The 

“Although the gaming sector had a dismal start in 2023, we believe its recovery trajectory remains intact as Malaysia and Singapore’s tourist numbers still have ample legs to go before returning to pre-pandemic levels,” HLIB said in its report Thursday.

In our previous story, contrary to HLIB’s opinion, financial holdings company Nomura has actually lowered its forecasts for Genting due to an expected slowdown of China’s economy which will actually impact Chinese tourist visits.

HLIB, however, is optimistic that tourism will also increase in China because of increased air travel and lessened regulatory scrutiny for the rest of the year.

“We expect the restoration of flight capacity and easing airfares around the globe, especially China, to boost leisure tourism and in turn uplift the performance of casino operators, while lingering fear over regulatory risks of NFOs to dissipate in 2H23 should the [Genting] group operation remain status quo post state polls,” the Malaysia-based bank explained.

HLIB added that Genting Group’s other assets like Resorts World New York City and Resorts World Cruises will remain stable considering domestic visits driving an already-normalized gross gaming revenue.

However, HLIB also said that investors were apprehensive on policy and regulatory change risk due to upcoming state polls. 

“Further re-rating catalysts for NFOs include the materialization of gaming laws amendment which is increasingly likely as the government strives to plug tax revenue leakage to boost the nation’s coffer by curbing illegal NFOs which has contributed to significant tax revenue losses,” HLIB said.

“Nonetheless, should the group’s operation remain status quo post state election, stock price should recover once the policy risk dissipates,” the bank explained.

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