HLIB maintains “overweight” rating for gaming sector

Based on consistent performance and positive surprises in the third quarter of 2023, Hong Leong Investment Bank (HLIB) Research maintains that the gaming sector is still “overweight”.

Due to the recent agreement allowing travel without a visa between China and Malaysia/Singapore and the restoration of global aviation capacity, the research indicated confidence in the long-term revival of the industry, particularly for casino operators.

For number forecasters, the political stability shown in the six state elections of last year portends well. There is little likelihood that other states will see store closures; closed businesses may be moved to other sites.

HLIB continues to have an optimistic view of the industry generally, and Genting Bhd is its preferred choice. Due to the steady increase in visitor numbers, Genting Singapore (GenS) and Genting Malaysia Bhd (GenM) anticipate additional profit increases in 2024. The casino business depends on Chinese tourists, and Resorts World Genting and Resorts World Singapore (RWS) stand to benefit from this trend.

HLIB sees room for improvement even if Singapore and Malaysia showed resilience as Chinese travel destinations in Q3 2023, with travel volumes falling short of 2019 levels. Concerts by Coldplay and Taylor Swift, among other major music events, are predicted to increase tourist arrivals in Singapore in 2024 and raise RWS in particular.

HLIB’s best choice in the industry is Genting, which has a target price of RM6.96 and a “buy” rating. The business claims that Genting is well positioned to profit from the recovery momentum of both GenS and GenM. Moreover, HLIB thinks Genting is now undervalued since its stock is only about 16% of what its GenS assets are worth. The value is calculated using an exchange rate and the most recent closing price.

Original story by: The Edge Malaysia