KUALA LUMPUR, April 28 — AllianceDBS Research has cut Genting Bhd’s financial year (FY) 2020 and 2021 earnings forecasts by 39 per cent and 18 per cent respectively, to reflect the lower earnings estimates of its subsidiaries Genting Malaysia Bhd and Genting Singapore Plc due to lower visitor assumptions following the outbreak of the Covid-19 pandemic.

It said visitor assumptions for Genting’s accommodations for FY20 and FY21 are expected to decline to 26.6 million and 28.3 million respectively, from 27.4 million and 29.5 million forecast earlier.

"Post revision, we assume visitor growth for FY20 and FY21 at negative eight per cent and negative seven per cent, respectively,” it said in a research note today.

It said Genting Malaysia’s earnings contribution from the US and other overseas operations is also forecast to contract by 15 per cent and 10 per cent, respectively, for FY20.

The research firm said Genting Singapore is also expected to see markedly lower visitor numbers to its casino and attractions on the back of a sharp decline in Singapore’s tourist arrivals due to extensive travel restrictions and a contraction in the republic’s gross domestic product (GDP) growth by 5.7 per cent in 2020.

AllianceDBS Research said the lower earnings forecast for Genting is also on expectations of lower earnings contributions from its unlisted entity, particularly the oil and gas and power segments and for bookkeeping purposes.

"We believe that our earnings estimates for FY20/21 are rather conservative (now 26 per cent/13 per cent below consensus),” it said.

Meanwhile, AllianceDBS Research said the commencement of Resorts World Las Vegas is expected to be a key re-rating catalyst for the group.

"The success of this venture, the group’s first direct involvement in the US gaming sector, could change the group’s earnings profile,” it said.

It said other potential re-rating catalysts for the group are stronger-than-expected earnings growth in Genting Singapore and the winning of the integrated resort (IR project) in Japan.

"Stronger-than-expected visitations to Resort World Genting in Malaysia may also provide upside potential to our earnings forecasts,” it added.

AllianceDBS Research has maintained its "Buy” call on Genting but revised downwards the target price to RM5.55 from RM6.80.

At 11.58am, GENT was down one sen or 0.25 pct with 2.79 million shares changing hands. — Bernama