Reopening of casinos will help reduce cash burn for Genting Malaysia

PETALING JAYA: Genting Malaysia Bhd’s recent announcement that it will reopen its casinos and resorts, both locally and in the US and the UK, on a staggered basis from today augurs well for the group as it will help minimise losses brought on by the various closures made under the introduction of lockdown measures.

In a note, CGS CIMB Research said that in April 2020, the cash burn (including interest expense) was RM4 million a day for Resorts World Genting (RWG) and US$7 million/£8 million a month for US/UK operations.

“However, we do note that operating capacity will be significantly reduced in the short-term and, thus, full earnings recovery to pre-Covid-19 levels may take longer than we initially anticipated,” it said.

In that regard, the research house said it maintaining its ‘add’ call on GenM with a target price of RM2.72, pending a visit to RWG to get a better assessment of its operations upon reopening and more details from management.

RWG will reopen on a staggered basis in line with its expected business volume, for: SkyCasino and Genting Club casinos for only Genting Rewards members, Skytropolis indoor theme park, Crockfords, Genting Grand and First World Hotels (Maxims, Resorts and Theme Park Hotels), Awana Skyway cable car and Genting express buses, and SkyAvenue shopping mall and selected dining outlets.

The group also announced that the British authorities have allowed the majority of its UK operations (Resorts World Birmingham and its other casinos) to reopen from July 4 with safety measures in place. Resorts World Casino New York City and Resorts World Catskill in the US are closed, but preparations are underway for them to reopen soon.

source https://www.thesundaily.my/business/reopening-of-casinos-will-help-reduce-cash-burn-for-genting-malaysia-EX2606251