Lottery business will be the fastest to make a comeback once recovery starts gaining traction

The gaming industry, which had a challenging year last year, is better equipped this year and will be one of the first to rebound once the recovery gains traction.

This is partly owing to the tremendous cost-cutting exercises that the firms have undertaken.

According to analysts, the sector can be a solid recovery play, aided by the ramping up of Covid-19 vaccines.

With the launch of phase three of the National Covid-19 Immunisation Programme last week and complete statewide herd immunity by year's end, Kenanga Research said business volumes should quickly rebound, underpinned by pent-up demand post-pandemic and coupled with the re-opening of borders.

As a result, industry participants are expected to post another round of poor results this year. However, Kenanga believes the impact will be less severe than 2020 because companies are more cost-efficient after going through cost-cutting exercises last year.

According to UOB Kay Hian's research section, accelerating the nation's vaccination strategy would reduce the gaming sector's consolidation period and result in significant capital appreciation through 2022.

According to the research firm, gaming firms should regain their revenue resilience and reliable cash flow streams in 2022-2023, allowing them to reinstate their previous payouts.

Meanwhile, Kenanga confirmed its "overweight" position in the sector yesterday, with Genting Bhd as its top selection.

Furthermore, Genting's earnings have been relatively constant compared to Genting (M) in the previous year, owing to its regionally diversified earnings, whereas Genting (M) has been hurt by more movement control order-led closures to the report.

In the meantime, Kenanga stated that the first half of 2021 had been a challenging period for the number of forecast operators (NFOs) such as Berjaya Sports Toto Bhd and Magnum Bhd due to increased mobility restrictions and, as a result, shuttered shops.

Despite the profit reduction, NFO operators continue to offer attractive dividend yields of 3% to 5% for the current fiscal year. Kenanga remarked.