ＧＡＭＩＮＧ ＳＨＡＲＥ－－－－ＮＯ ＭＯＲＥ ＡＴＴＲＡＣＴＩＶＥ ＡＮＤ ＳＨＩＮＩＮＧ

The gaming sector stood out as the star performer this year especially the NFO players such as BJTOTO and MAGNUM which rallied 26% and 47% YTD, respectively, boosted by the solid recovery of ticket sales. At one point, the casino operator, GENM also recovered considerably after being bashed down heavily end of last year due to a string of negatives such as a 10% casino tax hike, cancellation of Fox Theme Park and RM1.83b impairment for the US Tribe’s promissory note. However, the recovery was scuttled by the Empire deal in August, putting GENM and GENTING back to a square one. We believe both the NFO players are fully valued after the good run for the year. As such, we cut the gaming sector to NEUTRAL from OVERWEIGHT previously. Having said that, the NFO names still offer above average yield 4% to 6%.

No longer attractive; downgrade to NEUTRAL.

We are no longer upbeat on the gaming sector given the limited upside following the strong rally in NFO stocks while the casino stocks were hammered down due to a related party transaction (RPT). 

In the past three months, we downgraded both BJTOTO (MP; TP: RM2.80) and MAGNUM (MP; TP: RM2.80) to MARKET PERFORM from OUTPERFORM as they had rallied 26% and 47% YTD on the back of solid ticket sales benefiting from enforcement curbing illegal operators. We also cut GENM (MP; TP: RM3.20) to MARKET PERFORM due to its RPT acquisition of loss-making Empire which also affected sentiment toward

GENTING. (OP; TP: RM6.75) As such, we are of the opinion that the gaming sector is being fairly priced in at the moment. Thus, we downgrade the sector to NEUTRAL from OVERWEIGHT. Nonetheless, GENTING is still attractive given the stock is trading at 50% discount to its valuation which implies 1.5SD below its 3-year mean. The impending new licence in Japan is still the key price catalyst for GENTING.