The enforcement of the movement control order (MCO) phase 2 from January 22 has forced Resorts World Genting (RWG) casino to shut down temporarily, as recently announced by Genting Malaysia BHD.
News comes shortly after the casino announced huge losses of MYR 726.2 billion since lockdowns that apply to land-based casinos in Malaysia began.
The MCO orders non-essential businesses in six states to shut down in a further effort to curb the spread of Covid-19. Whilst RWG casino and resort properties have been shut down, essential services such as utilities, clinics, security and fire brigade will remain operational.
Despite its early stages, the Hong Leong Investment Bank (HLIB) Research house has predicted a 20% cut on the growth rate for annual visitors to the RWG, assuming that the lockdown will last for a total of two months. Even if current restrictions in Pahang were lifted, this conservative outlook accounts for the effects of the high number of cases in other populous states.
The research group has cut the FY2021 EPS forecast of RWG by 32%, while maintaining the FY2022 forecast in hopes of a steep recovery.
The price target for the “hold” rating is maintained at RM2.27, lowered from its previous value of RM2.43. It also said that every extra month of MCO beyond the assumed two-month period will reduce RWG’s FY2021 core net profit by RM144 million, and its fair value by two sen.
The research group added that the uncertainties surrounding how long the pandemic will last is likely to diminish investment interest in the industry.
As of 10.22am on Jan 22, Genting Malaysia is down to RM2.36 having traded 1.61 million shares – a fall of 0.84% or 2 sen. The company currently stands at a value of RM14.01 billion.