Acquisitions seen boosting Genting earnings

Genting Malaysia Bhd's (Genting) recent acquisition spree could
potentially take the group's earnings to new heights, especially when
the new assets commence operations.

In a research note today,
OSK Research Sdn Bhd said the acquisition started with Genting UK,
Aqueduct Racino in New York and the casino in Miami, Florida.

"These
corporate moves would lift Genting's earnings the same way that Genting
Singapore sprang an upside surprise with its maiden earnings," it said.


It said total visitor arrivals to Genting Highlands remained stable.

On the mass market domestic visitation, OSK said domestic day-trippers
made up 72 per cent of total visitor arrivals, while Malaysian hotel
guests contributed to 64 per cent of room occupancy.

"The mass
market casino volume is still up two per cent year-on-year despite a
single-digit decline in foreign visitation to the resort and a slight
decline in total visitation.

"This is largely attributed to the management's success in driving further improvements in yield management," it said.

On
the number forecast operator (NFO) segment, OSK said the introduction
of the jackpot element in the 4-digit (4D) games has spurred Berjaya
Sports Toto's (BToto) average sales per draw to RM1.5 million to RM2
million.

"However, due to some cannibalisation of its non-4D
games, the bet impact from introducing the 4D jackpot games has not been
as positive as that experienced by Magnum Corp Bhd via its version of
the 4D jackpot, for which sales grew 11 per cent initially versus
BToto's less than five per cent," it said.

OSK said in view of
the relatively matured NFO market in Malaysia and waning of the novelty
effect for 4D jackpot games, the overall NFO gaming growth was expected
to moderate to a more sustainable three to four per cent.

"The
NFO gaming market tends to reflect greater resilience in times of
economic downturn than the casino market given the smaller average size
of NFO bets," it said.

It has an "overweight" call on the gaming sector.

OSK has "buy" recommendations on both Genting Bhd and Genting while in
the NFO segment, it had a "buy" call BToto as it remained a defensive
high-dividend yield play. -- Bernama