KUALA LUMPUR (Sept 20): TA Securities Research has maintained an "overweight" stance on the gaming sector with a bet on no gaming tax hike in Budget 2024.

In a note on Wednesday, the research house upgraded Genting Malaysia Bhd (target price [TP]: RM2.71) to "buy" (from "hold") as the current valuation offers superior return to its peers, in terms of dividend yield and financial year 2024 (FY2024) price-earnings (PE) multiple.

TA Securities’ top pick is Genting Bhd ("buy", TP: RM5.35) as the research house likes the company’s diversified business model and cheap valuation compared to its global peers.

TA Securities made no changes to its sector earnings.

“In our sensitivity analysis, every one percentage point increase in gaming tax would lead to a 4.6% decline in Genting Malaysia's FY2024 profit and a 2.6% dip in Genting’s FY2024 profit.

“Meanwhile, Sports Toto Bhd’s earnings would decline by roughly 7.5% for every one percentage point increase in gaming tax without adjustments made to the prize payout.

“However, we reiterate our view that this is an unlikely scenario as the hike would derail the earnings recovery process,” it said.