Phillip Capital has reaffirmed its “BUY” rating for Genting Malaysia Bhd, driven by optimistic developments in the United States market and a promising timeline for acquiring a full casino license in downstate New York.
Positive Signs in the United States
Genting Malaysia has demonstrated robust performance in its existing U.S. operations, particularly with its video gaming machine (VGM) business in New York. According to Phillip Capital’s recent update, the company has captured a significant share of the New York state market, achieving 43.3% in Q2, which represents a 5.5% year-on-year increase in net win. This growth rate surpasses the state’s overall expansion of 4.3%, signaling strong operational success.
The positive trajectory of Genting Malaysia’s U.S. ventures is a key factor in Phillip Capital’s bullish stance. The company’s U.S. operations accounted for 18% to 20% of its total revenue and EBITDA in 2023. With such substantial contributions to the company’s financials, the expansion and performance in the U.S. market are critical to the firm’s overall success.
New York Casino License Prospects
A pivotal aspect of Phillip Capital’s positive outlook is the anticipated issuance of full casino licenses in downstate New York. The New York State Gaming Facility Location Board has recently updated its timeline for granting these licenses, which has been described as a “positive development” by Phillip Capital.
This updated timeline is seen as a significant catalyst for Genting Malaysia, particularly because its slots-only Resorts World New York City is a strong contender for one of the three full casino licenses. Phillip Capital anticipates that the granting of a full casino license could lead to an additional EBITDA contribution of RMB250 million to RMB320 million (approximately USD 53.5 million to USD 68.5 million) in 2026. This projection assumes the installation of 200 to 250 tables in the first year of operation, indicating a substantial revenue boost.
Valuation and Investment Strategy
Phillip Capital continues to recommend accumulating shares of Genting Malaysia during periods of price weakness. The firm’s valuation metrics underscore its attractiveness: Genting Malaysia is currently trading at a relatively low 6.6x 2025 enterprise value/EBITDA. This valuation suggests that the stock is undervalued compared to its earnings potential, providing a compelling investment opportunity.
Phillip Capital’s endorsement of Genting Malaysia is rooted in strong performance in the U.S. market and promising prospects in New York. The updated timeline for casino licenses and the expected EBITDA boost from the potential expansion underscore a positive investment thesis. However, investors should remain mindful of potential risks that could impact the company’s performance. With Genting Malaysia trading at a favorable valuation, Phillip Capital’s recommendation to buy and accumulate shares remains a strategic move for those seeking growth in the gaming and hospitality sector.