Genting Malaysia has clear catalysts for further growth, though investors are likely waiting for further clarity on the opening of its 20th Century Fox theme park before buying the shares, Nomura said in a research note.
The Malaysian government in June said it would remove the Goods and Services Tax, which is likely to result in a MYR 200 million ($49.3 million) annual boost to both revenue and EBITDA, Nomura said.
A further catalyst will be the delayed theme park opening, though the brokerage said it’s not confident about the Q4 launch date.
“We expect GENM’s next leg of growth to come from its capex in Malaysia, which should benefit from the expansion in capacity being undertaken by the group, funded by its monopoly in the Malaysian market, which is a growing cash cow for the company,” it said. “With the bulk of capacity expansion coming to an end, we think earnings should rebound in 2019.”
Nomura expects Malaysia revenue and EBITDA to grow 13 percent and 18 percent respectively in 2018, with a sharper 16 percent and 27 percent step-up in 2019
“We reiterate our Buy call, and GENM continues to be one of our top Buy ideas for Malaysia for 2018.”
Genting launched a 10-year masterplan in 2013 to revamp facilities at its Resorts World Genting property. The company is spending more than MYR10 billion under the Genting Integrated Tourism Plan, adding new hotels, a cable car and more retail space as well as new casino facilities. The theme park is seen as the key crowd puller in the plan.