Resorts World Las Vegas EBITDA seen as below expectations despite record June quarter

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Analysts have described the EBITDA performance of Genting Berhad’s US$4.3 billion Las Vegas integrated resort, Resorts World Las Vegas, as “still below expectations” despite the property recording the highest quarterly revenue and EBITDA numbers since opening in 2Q22.

In a note examining Genting Bhd’s results, which were released overnight (Asia time), Nomura’s Tushar Mohata and Alpa Aggarwal noted that sequential improvement at RWLV was encouraging, with revenue rising from US$164 million in Q1 to US$203 million, and EBITDA from US$14 million to US$37 million. However, “we feel that the absolute EBITDA is still below expectations, especially as we estimate RWLV also has quarterly interest of US$25 million and depreciation charges of US$60 million, which will drag EBITDA into deep losses at the net income level,” they said.

“Furthermore, given [hotel] occupancy is already 90%, more improvement in EBITDA needs to come from yield improvement, which is arguably harder to achieve than capacity-led growth.”

In its 2Q22 results announcement, Genting Bhd said the improved performance of RWLV was driven by the highest quarterly amount of group business nights achieved to date and strong Las Vegas travel trends.

“RWLV celebrated the property’s first year anniversary with some exciting record bests in occupancy, group business, revenue and EBITDA, all of which show positive movement towards future targeted projections,” the company said.

“With the growing return of conventions and business travel to Las Vegas, RWLV’s booked group business for the remainder of 2022 is stronger than the number of bookings in 1H22. New performances at the Resorts World Theatre and future projects are expected to drive significant foot traffic in the remainder of 2022 and beyond.”

Group-wide revenue for Genting Bhd, which also counts Genting Singapore and Genting Malaysia among its business arms in the gaming space, almost tripled year-on-year to MYR5.69 billion (US$1.27 billion) while Adjusted EBITDA climbed to MYR2.03 billion (US$454 million). The company also returned to profit at MYR110.3 million (US$25 million) compared with an MYR599 million (US$134 million) loss in 2Q21.