Broker: UOB Kay Hian
Date of Report: 15 July 2025

Malaysia Gaming Sector 2025: Dividend Yields Shine Amid Market Uncertainty

Sector Overview: Defensive Strength and Selective Opportunities

The Malaysian gaming sector has demonstrated resilience and outperformance in 2H25, even as broader market sentiment wavers due to volatile US trade policies and higher tariffs on Malaysian exports. The sector outpaced the FBMKLCI index, bolstered by robust tourism growth, attractive dividend yields, and improved consumer spending prospects following a recent Overnight Policy Rate (OPR) cut. Despite maintaining a MARKET WEIGHT stance, there are selectively positive outlooks for companies with near-term catalysts, notably Genting Malaysia (GENM), Magnum, and RGB.

Key Drivers Behind Sector Outperformance

• Tourism Surge: Malaysia’s international tourist arrivals jumped 10.5% YoY in the first four months of 2025, with visitors from Greater China up 28.8%, surpassing pre-pandemic levels. Initiatives like charter flight incentives, visa liberalization, and aggressive overseas promotional campaigns drove this growth, directly benefiting casino operators.
• Depressed Valuations & Attractive Yields: Despite a recent rebound, valuations remain at -1 to -1.5 standard deviations below historical means, offering compelling entry points for mid- to long-term investors. Dividend yields across the sector for 2025-26 remain lush at 4-10%, especially appealing in the current low-interest environment. Further yield compression is anticipated, supporting capital upside potential.
• Consumption Tailwinds: The recent 25bp OPR reduction to 2.75% is expected to lift discretionary spending, which should benefit both casino and number forecast operator (NFO) segments. Channel checks show improving gaming volumes at Resorts World Genting (RWG) and firmer NFO ticket sales quarter-on-quarter in 2Q25.

Peer Comparison Table (As of 15 July 2025)

Relative Performance: Gaming Stocks vs FBMKLCI (2H25)

• Sports Toto: +14.6% (Beat KLCI by 14.3%)
• Magnum: +4.7% (Beat KLCI by 4.4%)
• Genting Malaysia: +4.4% (Beat KLCI by 4.4%)
• Genting Berhad: +1.3% (Beat KLCI by 1.0%)
• RGB International: 0.0% (Trailed KLCI by 0.3%)

Casino Subsector: Catalysts and Outlook

GENM (Genting Malaysia)

• Target Price: RM2.35 (up from RM2.18)
• Recent Developments: Two major US catalysts surfaced in July 2025:
  • US District Court granted Genting America’s motion to dismiss RAV Bahamas’ US\$600m lawsuit for the Resorts World Bimini operations, removing a key legal overhang.
  • Resorts World New York City (RWNYC) submitted a US\$5.5b bid for a full commercial casino license in downstate New York. If successful, this could add US\$603m in gross gaming revenue and boost GENM’s EBITDA by over US\$106m annually upon maturity.
• Tourism Growth: GENM stands to benefit directly from the surge in Chinese visitors and the upcoming Visit Malaysia 2026 campaign. The extension of Malaysia-China visa-free status and longer travel periods further support this trend.
• Dividend Outlook: Expected to maintain a lowered 11 sen DPS in 2025, with healthy cashflow and low-to-moderate capital expenditure requirements supporting payouts.

GENT (Genting Berhad)

• Target Price: RM3.86 (up from RM3.79)
• Earnings Trajectory: A slow start to 2025 is expected to give way to sequentially stronger results in 2Q25 and 2H25 as both GENM and Genting Singapore (GENS) restore pre-pandemic earnings dynamics. Accelerated international arrivals and ramped-up regional flight capacity should drive further momentum.
• US and Singapore Operations: Resorts World Las Vegas (RWLV) is expected to improve performance throughout 2025 owing to increased conventions and major events (notably Formula 1), which will draw more visitors.
• Dividend Policy: Anticipated to maintain a reduced 10 sen DPS in 2025, backed by improving cash flows.
• Regulatory Relief: Thailand’s withdrawal of its casino legalization plan removes a potential competitive threat and frees up possible capital requirements for both GENM and GENS, improving dividend prospects and reducing debt risk.

NFO Subsector: Recovery and Yield Potential

Magnum Berhad

• Target Price: RM1.56 (BUY)
• Dividend Yield: Prospective 6-9% yields for 2025-26, with payouts expected to be sustained at 70-80% of earnings.
• Sales Recovery: NFO ticket sales have improved and stabilized at 85-90% of pre-pandemic levels, with projections to reach 90-100% in 2Q25-2H25.
• Potential Catalyst: Magnum holds a 6.3% stake in U-Mobile, which is rumored to be eyeing an IPO in 2026 valued at RM10 billion. Monetization could fetch RM630 million (RM0.44/share, ~33% of current market cap). This could enable special dividends up to 33% yield or significant debt reduction, boosting net profit by 14-15%.
• Valuation: Current share price more than reflects prior pandemic and political risks. Sequential earnings recovery is expected.

Sports Toto Berhad (SPTOTO)

• Target Price: RM1.44 (HOLD)
• Dividend Yield: Expected to offer 5.7% yield in 2025, with stable payout policy.
• Sales and Market Position: Ticket sales are returning to 90-92% of pre-pandemic levels, with ongoing efforts by authorities to clamp down on illegal operators. However, near-term re-rating catalysts remain limited.

Small-Mid Cap Focus: RGB Berhad

• Target Price: RM0.43 (BUY)
• Valuation: Now trading at just 5.6x 2025F PE (4.2x ex-cash), following a 26% year-to-date share price retracement. Net cash stands at RM122.6m, equivalent to 26% of market cap.
• Dividend Yield: Forecasted 50% payout ratio implies a 9-10% yield in 2025-26.
• Growth Drivers: RGB is well-positioned to capitalize on Southeast Asia’s booming gaming industry, especially in the Philippines, which is expanding integrated resorts (IRs) and increasing slot machine quotas. Remote gaming-friendly policies add further upside.
• Sales Outlook: Sales of slot machines (SSM) may soften in 2025 due to broader macroeconomic headwinds and US trade policy impacts, but are expected to remain resilient at 3,800-4,000 units (2024: ~4,500). PACGOR’s modernization, recurring replacement cycles, and new small-scale gaming operations in the Philippines will continue to underpin demand.

Key Industry Trends and Outlook

• Tourism Malaysia Targets: The Visit Malaysia 2026 (VM2026) campaign aims for 45 million international visitors, offering a significant tailwind to casino operators.
• Dividend Resilience: All major players are expected to maintain or improve dividend payouts, leveraging robust cashflows and streamlined capex after pandemic lows.
• Regulatory Environment: Withdrawal of the Thai casino bill alleviates regional competitive pressure. For NFOs, further upside could come from potential legalization of online operations.
• Risks: While macroeconomic headwinds (especially from US policy) persist, sector valuations already price in significant risk, and the dividend yield story remains intact for yield-seeking investors.

Conclusion: Selective Positivity within a Defensive Sector

The Malaysian gaming sector stands out in 2025 for its defensive qualities, attractive dividend yields, and rebounding fundamentals, despite broader market volatility. While sector-wide catalysts may be limited after recent outperformance, select names—particularly Genting Malaysia, Magnum, and RGB—offer compelling value for investors seeking yield and exposure to the tourism and consumption recovery. Ongoing reforms, tourism initiatives, and disciplined financial management underpin a cautiously optimistic outlook for the remainder of 2025 and into 2026.