KUALA LUMPUR, April 27 — Resort operator Genting Group’s first quarter results for 2023 may be impacted by lingering fears over the Batang Kali landslide, according to Maybank Investment today.
In a report today, the bank said that the landslide, which occurred on December 16, 2022, caused a 10 per cent quarter-on-quarter drop in visitor arrivals to Resorts World Genting (RWG) during the fourth quarter of 2022, with only 5.3 million visitors recorded.
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“We understand that rainy weather in January and February 2023 discouraged many from visiting RWG especially during the peak Chinese New Year season for fear of another landslide,” read the report.
Despite the potential short-term impact of the landslide, the bank maintained its “Buy” call on Genting’s stock, although it lowered the discounted cash flow target price (DCF-TP) to RM2.96 per share — a decrease of 1 sen per unit.
The report also highlighted that the group’s recovery has accelerated in the last two months, with RWG’s visitor arrivals picking up from March 2023 onwards after the weather improved and all 10,500 rooms at the resort became available.
It noted that the rooms are now available due to sufficient labour for room upkeep.
“The latter is especially important as overnighters spend considerably more than day-trippers.
“RWG gross gaming revenue perfectly correlates to room nights sold,” it said.
Additionally, the bank said that the tender results for a downstate casino licence in New York may be delayed to the first quarter of 2024 from the initially expected fourth quarter of 2023
It said that the tender could potentially allow Resorts World New York City to deploy table games and add more value to Genting’s DCF-TP.
The Batang Kali landslide claimed 31 lives, and was declared by the Special Malaysia Disaster Assistance and Rescue Team (Smart) to be the second-deadliest disaster in Malaysia.
According to Smart, the deadliest was the Highland Towers condominium collapse in 1993 that claimed 48 lives.