Tourism Recovery and Gaming Sector Outlook in Malaysia
The local gaming sector in Malaysia is expected to experience a positive outlook in the coming years, thanks to the rising number of tourist arrivals and improvements in the sector’s fundamentals. Analysts at UOB Kay Hian (UOBKH) Research have predicted that tourist arrivals will surpass the levels seen in 2019.
According to Tourism Malaysia, the government’s efforts to boost tourism, such as the charter flight matching grant incentive, visa liberalization program, and increased promotional activities abroad, will contribute to achieving the target of 27.3 million foreign tourist arrivals by 2024. The casino segment within the gaming sector is expected to directly benefit from higher inbound patronage. As a result, tourism-related investment ideas, including the gaming sector, are likely to remain attractive to investors throughout the year.
China’s outbound tourists are also playing a significant role in driving growth in the gaming sector. China Eastern Airlines, one of the top three airlines in China, has seen its international passenger load reach 89% of pre-pandemic levels in March 2024. With the ramp-up of China’s international flight capacity and frequencies, popular tourist destinations like Resorts World Genting and Resorts World Sentosa are expected to see an increase in footfall and earnings from Chinese tourists.
Gaming companies in Malaysia are poised for revenue resilience and consistent cash flow in 2024, allowing for the potential restoration of generous dividend payouts. UOBKH Research anticipates dividend payouts of 4.6% to 8.2%, similar to pre-pandemic levels. Genting Bhd and Genting Malaysia Bhd are expected to reinstate dividends per share of 19 sen and 22 sen, respectively, from 2024 onwards. Number forecast operators (NFOs) are also looking to restore their pre-Covid-19 dividend payouts of 80% to 90%.
Despite facing challenges from illegal operators, the NFOs are gradually witnessing a shift in punters’ habits. The efforts by authorities to crack down on illegal bookies have led to punters seeking legal avenues for their bets. The potential legalization of online operations for legal operators could further benefit the NFOs in the future.
RGB International Bhd, a gaming company, is well-positioned to capitalize on the booming gaming scene and exponential growth in the ASEAN region. Particularly in the Philippines, where gaming capacity expansion and supportive legislation, such as higher slots capacity quotas and remote gaming policies, present promising opportunities for RGB International’s growth.
Overall, the recovery of the tourism sector and the positive outlook for the gaming industry in Malaysia bode well for investors and highlight the potential for significant growth in the coming years.
Additional Facts:
1. Malaysia’s gaming sector includes not only casinos but also number forecast operators (NFOs) which offer lottery-type games.
2. Resorts World Genting and Resorts World Sentosa are popular tourist destinations in Malaysia known for their integrated resorts that combine gaming, entertainment, and accommodation.
3. The ASEAN region, which includes countries like Thailand, Vietnam, and Indonesia, is experiencing rapid economic growth and increasing demand for leisure and entertainment activities, presenting opportunities for the gaming industry.
Most important questions and answers:
1. What factors are contributing to the positive outlook for the gaming sector in Malaysia?
– Rising number of tourist arrivals
– Government initiatives to boost tourism, such as the charter flight matching grant incentive and visa liberalization program
– China’s outbound tourists driving growth in the sector
2. How are gaming companies in Malaysia expected to maintain revenue and cash flow resilience?
– Poised for revenue resilience and consistent cash flow in 2024, allowing for potential restoration of generous dividend payouts
– Anticipated dividend payouts of 4.6% to 8.2%, similar to pre-pandemic levels
– Genting Bhd and Genting Malaysia Bhd expected to reinstate dividends per share of 19 sen and 22 sen, respectively, from 2024 onwards
3. What challenges do gaming companies face in Malaysia?
– Competition from illegal operators
– Potential controversies surrounding the legalization of online operations for legal operators
Key challenges or controversies:
1. Competition from illegal operators: The gaming sector in Malaysia faces challenges from unauthorized operators who may offer similar games and attract customers away from legal operators. Authorities are cracking down on illegal bookies, but their activities still pose a threat to the industry.
2. Legalization of online operations: The potential legalization of online operations for legal gaming operators could be controversial. There may be debates and concerns about the impact of online gambling on society, including issues related to addiction and the regulation of online platforms.
Advantages and Disadvantages:
Advantages:
– Positive outlook for the gaming sector in Malaysia, driven by rising tourist arrivals and efforts to boost tourism
– Potential for significant growth in the coming years, presenting investment opportunities
– Reinstatement of dividend payouts by gaming companies, allowing for potential returns to investors
Disadvantages:
– Competition from illegal operators, which may affect the overall revenue and market share of legal gaming companies
– Controversies surrounding the potential legalization of online operations, including concerns about the social and regulatory implications of online gambling
Suggested Related Links:
– Tourism Malaysia
– Genting Group
– RGB International Bhd
The source of the article is from the blog agogs.sk