KUALA LUMPUR (July 24): Phillip Capital has maintained its 'buy' rating for Genting Malaysia Bhd (KL:GENM) at RM2.57, with an unchanged target price of RM3.45, and said the casino group’s video gaming machine (VGM) operations continued to outperform its peers in New York, with its market share expanding to 43.3%.
In a note on Wednesday, the research house said it expects a New York downstate casino licence to be awarded by end-December 2025.
Phillip Capital said the New York State Gaming Facility Location Board recently updated the timeline for the request for applications for three casino licences.
It said the application deadline is set for June 27, 2025, followed by the Community Advisory Committee vote by Sept 30, 2025.
“A decision is expected by Dec 1, 2025, with the licences expected to be awarded by Dec 31, 2025.
“We view this as a positive development, and believe it would serve as a rerating catalyst with a more definite timeline.
“We had earlier projected an additional RM250 million to RM320 million Ebitda contribution in 2026, assuming 200-250 tables being set up for the first year of operation,” the house said, referring to earnings before interest, taxes, depreciation and amortisation.
The research house highlighted that GenM's New York VGM facilities — including Resort World New York City (with Nassau OTB) and Resorts World Hudson Valley — reported a combined net win growth of 5.5% year-on-year in the second quarter of 2024, outpacing New York State’s overall growth of 4.3%.
“Overall, we expect an improved performance from the US operations, which made up 18% to 20% of GenM’s group revenue and Ebitda in 2023," the house said.
Phillip Capital made no changes to its earnings forecasts for GenM, and said the casino operator remains its sector top pick, given the superior dividend yield of about 6.8%.
"We continue to advocate investors to accumulate on share price weakness, as GenM trades at an undemanding 6.6 times 2025 enterprise value/Ebitda.
"Key downside risks to our call include lower-than expected win rates, a hike in gaming taxes, drag from key associates, and value-destructive related-party transactions," the house said.