GENM: Gaming Operator’s Earnings Beat Expectations on Domestic Strength, Analyst Maintains ‘Buy’ Rating

A leading regional gaming operator reported its nine-month 2025 core profit of RM446.1 million, exceeding its own expectations and aligning with consensus forecasts. This strong performance was primarily attributed to higher-than-expected hold percentages within its Malaysian casino operations.

Performance Review

On a quarterly basis, the third quarter of 2025 saw adjusted pre-tax profit (PBT) surge by a significant 62.9% year-on-year to RM299.0 million, driven by the robust performance of its Malaysian casino segment. However, the core profit for the quarter contracted by 25.4% to RM161.8 million quarter-on-quarter, largely due to a high effective tax rate. For the cumulative nine-month period, adjusted EBITDA contracted by 5% year-on-year to RM2.6 billion, despite an 8.5% increase in revenue, weighed down by weaker performances from its UK and US operations.

Operational Highlights and Challenges

Resorts World Genting (RWG) delivered another solid performance in 3Q25, experiencing a 25% year-on-year surge in VIP volume and a 17% year-on-year increase in non-VIP volume. Foreign visitation remained strong, with notable increases from Singapore (+7%), China (+17%), and India (+8%) during the quarter. Reflecting these positive trends, the investment bank has raised its FY25-26 earnings projections by 6.6-48.9%, factoring in higher win rates across VIP and non-VIP segments in Malaysia. Conversely, FY27 earnings projections have been lowered by 18.8% due to revised ringgit exchange rate assumptions.

Future Prospects and Investment Rating

The company maintains a strong chance of securing a new casino license in downstate New York, especially following MGM Resorts’ withdrawal from the bidding process. The operator has pledged a substantial US$7.5 billion investment for this brownfield development, anticipating a first-mover advantage with potential table game offerings by July 1, upon receiving the license. However, the investment bank advises caution, awaiting clarity on the casino tax structure and the exact license validity period, particularly given that one previous bidder withdrew due to a 15-year license term and a minimum tax of approximately USD400 million.

Given the revised earnings outlook, the investment bank has raised its discounted cash flow (DCF) valuation, increasing its target price from RM2.35 to RM3.06, representing a 30.2% upside from the last traded price of RM2.35. The firm has maintained its “BUY” recommendation on the stock.