Maintain BUY with a tad lower TP of MYR5.43 (-1%)
To date, Resorts World Las Vegas (RWLV) has been uninspiring. Yet, we
are turning a bit more optimistic on it as the Omicron wave in the United
States subsides and the uber cool tunnel connecting it with the bustling
Las Vegas Convention Centre (LVCC) will open very soon. Our RWLV
estimates are unchanged. Our FY22E/FY23E/FY24E earnings are modified
-7%/+25%/-12% to reflect our latest GENM, GENS and GENP estimates.
Trim SOP-based TP by 5sen to MYR5.43. Maintain BUY call on GENT.
1Q22 unlikely to be better QoQ for RWLV, we opine
Since opening on 24 Jun 2021, RWLV has struggled to generate EBITDA
(Fig. 1). It cited a 30 Jul 2021 mask mandate and cancellation of several
conventions at the nearby Las Vegas Convention Centre (LVCC) as reasons
for the weakness. Judging from RWLV’s presentation to the Nevada
Gaming Control Board on 2 Mar 2022 and Wynn Las Vegas (WLV) 1Q22
EBITDA easing 14% QoQ, 1Q22 will likely be another weak one for RWLV
due to the Omicron wave that hit the United States in Dec 2021 (Fig. 2).
2Q22 likely to be a lot better for RWLV, in our view
Since the Omicron wave settled in the United States, the mask mandate
was lifted on 10 Feb 2022. This catalysed the resumption of conventions
at the LVCC (Fig. 3), thus boosting business at the nearby RWLV and WLV.
Conventions are important for integrated resorts (IR) as they drive traffic
during weekdays. Another major catalyst for RWLV, in our view, is the
soon-to-be-opened underground tunnel connecting RWLV with LVCC via
Tesla cars dubbed the Vegas Loop (page 5 to 7).
Vegas Loop likely to be a boon for RWLV, we gather
RWLV will be the first IR on the Vegas Loop. To be sure, other IRs will be
eventually added to the Vegas Loop but judging from the time taken to
construct the tunnel between RWLV and LVCC, we gather that RWLV could
have a monopoly on incremental traffic from LVCC for at least a year.
Our RWLV estimates are unchanged (Fig. 7) but our FY22E/FY23E/FY24E
earnings are modified -7%/+25%/-12% to reflect our latest GENM (link),
GENS (link) and GENP (link) estimates.