Malaysian banking group Maybank says it is now “unsure” about the prospects of Genting Berhad’s ambitious US$4.3 billion Resorts World Las Vegas (RWLV) project due to the impact of COVID-19.
Less than a year out from the resort’s planned summer 2021 opening, Maybank Associate Director, Research – Equity Markets, Samuel Yin Shao Yang, says there must now be genuine concerns that RWLV won’t be profitable upon launch.
“To date, Genting has invested US$2.4 billion in RWLV,” he said in a note.
“The United States is now the country worst hit by the COVID-19 pandemic. If the COVID-19 pandemic in the United States does not stabilize by the time RWLV opens in the summer of 2021, we fear that it will generate losses.”
Maybank said it was currently assigning “nil value” to RWLV in its assessment of Genting Berhad’s status and was downgrading the company from Buy to Hold.
The COVID-19 pandemic has proven particularly challenging for Genting and its subsidiaries, which have all reported substantial losses in recent weeks due to the closure of their respective casino and hospitality holdings at various stages throughout the pandemic.
Maybank noted that the outlook for two of Genting’s key subsidiaries – Genting Malaysia and Genting Singapore – was mixed.
“49%-owned Resorts World Genting (RWG)has been performing better than Genting Malaysia expected,” Yin said. “RWG reopened on 19 June 2020 with ~30,000 visitors daily but now welcomes ~45,000 visitors daily. RWG may have recouped 2/3 of its usual visitation.”
However, Genting Singapore “does not expect [Resorts World Sentosa] to breakeven in the near future on lack of international gamblers and social distancing requirements.
“Only locals 4.0 who are card members can gamble currently but they historically account for the minority of RWS’ gamblers.”