Genting Malaysia Bhd is poised for continued earnings growth, driven by a robust recovery in tourism at its flagship property, Resorts World Genting (RWG). According to CGS International Research (CGSI Research), the number of Chinese visitors to RWG has nearly returned to pre-COVID-19 levels in the fourth quarter of 2024, with a shift towards higher-yielding tourists over lower-spending tour groups. The timely reopening of a substantial portion of RWG’s casino floor is also seen as a key factor in supporting the surge in gaming volume and visitor numbers, particularly in anticipation of the Chinese New Year period. RWG recorded 21 million visitors in the first nine months of 2024, with 74% of them being day trippers.

The research firm also highlighted that RWG is benefiting from strong growth in its key visitor markets. Singaporean visitors have returned to pre-pandemic levels, growing 15% year-on-year to 910,000 in the first three quarters of 2024. Chinese visitors have shown substantial improvement, with 114,000 arrivals in the third quarter of 2024, up from 97,000 in the second quarter and 44,000 in the same period last year. CGSI Research believes that Genting Malaysia will continue to benefit from the visa exemption for Chinese tourists, which remains in place until 2026, alongside increased airline capacity and flight frequencies between China and Malaysia. The firm also noted that initiatives under the Tourism Ministry, ahead of Visit Malaysia Year 2026, would help attract more high-spending Chinese tourists to RWG.

The reopening of RWG’s mass-market casino area is expected to be a significant boost to the resort’s performance, especially with its new focus on digitalisation, including the introduction of electronic table games with smaller bet sizes aimed at attracting younger visitors while managing manpower costs. This move is seen as a positive development that will help RWG accommodate the expected rise in gaming volume and visitor traffic leading into the Chinese New Year, ultimately providing support to Genting Malaysia’s first-quarter 2025 earnings.

CGSI Research maintained its "add" call on Genting Malaysia, projecting a 42% compound annual growth rate (CAGR) in earnings per share from 2023 to 2026, driven by tourism recovery and revenue growth at RWG. With improved earnings performance and strong free cash flow, the research firm expects Genting Malaysia to maintain a dividend payout of 15 sen per share for 2024, offering an interim dividend yield of 4% and a full-year yield of 6.8%. However, the firm pointed out a key risk to the company’s share price stemming from a lawsuit filed by RAV Bahamas Ltd against Genting Americas Inc, which could potentially affect Genting Malaysia’s bid for a casino license in New York. Despite this, CGSI Research has not factored in any potential upside from the New York casino bid in its valuation.

Looking forward, CGSI Research anticipates that RWG’s long-term EBITDA margin will remain sustainable around 31% to 32%. Despite challenges posed by a higher sales and services tax in 2024, Genting Malaysia has successfully maintained its EBITDA margin at 31% for the first nine months of the year, driven by effective cost-saving measures. The company’s strategy will continue to focus on markets that provide better yields and expanding into more profitable areas, positioning Genting Malaysia for continued growth in the coming years.