Bank cuts GEN Malaysia 2024-25 revenue as sales tax rises

Maybank Investment Bhd cut its 2024 and 2025 revenue forecasts for Genting Malaysia Bhd, the operator of Resorts World Genting (pictured), the country's only licensed casino complex, by 4% and 5%, respectively. It said this was due to a 2 percentage point increase in services tax in Malaysia.

The forecast adjustment put it at $913 million ($191.7 million) next year and $1.01 billion ($191 million) in 2025, based on core net income estimated by the agency.

"The increase in service tax rates is effectively a 'gaming tax' increase on resort world genting," analyst Samuel Yin Sao Yang said in a note on Thursday.

But he added that Genting Malaysia executives could use "rescue measures."

Mr Yin said the company could "cut junket commission rates or cut VIP rebate rates to mitigate the impact of higher service taxes, increase hotel room rates, delay pay increases and ration water and energy consumption."

The analyst told Genting Malaysia investors that the "other catalyst" is whether the group "successfully secured a full casino license in New York City and recovered its investment in Masipi Wimpanoag."

The latter was a reference to an old and stagnant tribal gaming project proposal in the U.S. state of Massachusetts.

Maybank noted that based on Malaysia's budget proposal, which was introduced on Oct. 13, the country's services tax rate would be raised to 8% from the current 6%.

Resorts World Genting said it was "paying the service tax" on behalf of gamblers.

Maybank said in its latest budget release for fiscal 2024 that 2026 will be designated locally as the "year of visiting Malaysia," with 26.1 million foreign tourists and a target of 97.6 billion yuan in tourism spending.

Over 2024, $350 million will be generated for tourism promotion and approval of arrival visas for travelers with certain qualifications. Maybank said government announcements make it easier for other forms of conditional entry, such as social visitation rights and multiple entry visas.

"We hope the current 15% shortfall in Resort World Genting visitors will be reduced compared to 2019 and more tourists will be able to visit in key source markets such as China and India," Maybank analyst said.

BY: 온라인카지노