The Genting Group has many listed subsidiaries and related companies on both the Malaysia and Singapore Exchanges. However, the starting of the group as a listed company begun with Genting Bhd.

Genting Bhd is one of Malaysia’s leading listed conglomerates which has a wide range of businesses such as gaming, leisure, hospitality, palm oil, property, and energy in key nations which include Malaysia, Singapore, the United States, and the United Kingdom. As of 24 November 2019, Genting Bhd is valued at around RM 23.3 billion in market capitalisation. In this article, I’ll list down 9 things that you need to know about Genting Bhd before you invest.

  • Corporate Structure
    For a start, Genting Bhd is an investment holding company which owns the following key corporations:
No.CorporationsStakes (%)Description of Business


1


Genting Malaysia Bhd


49.5%
Operations of Resort Destinations in Malaysia, the United States, the United Kingdom, the Bahamas, and Egypt
2Genting Singapore Ltd52.7%Operations of Resort World Sentosa

3

Genting Plantations Bhd

51.3%
Palm Oil Plantations and Milling Activities in Malaysia and Indonesia



4



Genting Energy Ltd



100.0%
Oil & Gas Exploration, Development and Production Activities in Indonesia and China and Power Generating Activities in Indonesia, China, and india. 
  • Main Income Contributor
    Despite having a diverse business interest, most of its profits have been contributed by Resorts World Genting and Resorts World Sentosa. They have collectively accounted for 87.6% of Genting Bhd’s earnings before interest and taxes (EBIT) in 2018. Here is the breakdown of its EBIT 2018 for Genting Bhd.

No.

Business Segments
EBIT 2018 (RM Million)EBIT 2018 (%)
1Leisure & Hospitality (Malaysia)2,364.640.0%
2Leisure & Hospitality (Singapore)2,817.447.6%
3Leisure & Hospitality (Others)123.12.1%
4Palm Oil Plantation & Milling 180.33.0%
5Power 485.08.2%
6Property45.10.8%
7Oil & Gas148.52.5%
8Investments & Others-250.6-4.2%
Genting Bhd’s EBIT 20185,913.4100.0
  • Group Revenue
    Genting Bhd has recorded substantial jump in group revenues from RM 8.9 billion in 2009 to RM 18.6 billion in 2011. It is mainly attributable to its launch of Resorts World Sentosa in 2010 and its operations situated in the United States, the Bahamas, the United Kingdom, and also Egypt in 2011. Since then, Genting Bhd had maintained its group revenues at RM 17 – 18 billion per annum, contributed mainly by operations in both Malaysia and Singapore. In 2017 and 2018, Genting Bhd had increased its group revenues to around RM 20+ billion per annum due to higher revenues in both Malaysia and Singapore.
  • Profitability
    In 2012, Genting Bhd has recorded its highest shareholders’ earnings of RM 3.98 billion over the 10-year period. This is boosted by a one-off profits totaling to RM 1.89 billion from its disposal of the Kuala Langat Power Plant to 1MDB. Since then, its shareholders’ earnings declined to RM 1.27 billion in 2015. In 2016, Genting Bhd had recorded as much as RM 2.12 billion in shareholders’ earnings. This is due to another one -off profits amounting to RM 1.3 billion from its disposal of its interests in Genting Hong Kong. Then after, Genting Bhd had recorded about RM 1.3 – 1.4 billion in shareholders’ earnings per year. Since 2012, Genting Bhd has recorded a decline in return on equity (ROE) from 18.36% to as low as 3.98% in 2018.
  • Latest 12-Month Results
    For the last 12 months, Genting Bhd had made RM 21.8 billion in group revenues. Out of which, it had recorded as much as RM 1.54 billion in shareholders’ earnings or 40.0 sen in earnings per share (EPS).

Period
Group Revenue(RM Million)Shareholders’ Earnings (RM Million)Earnings per Share (EPS) (Sen)
Q3 20185,381.5-275.8-7.18
Q4 20185,397.4655.217.01
Q1 20195,572.8561.614.59
Q2 20195,445.7599.715.57
Latest 12-Months21,797.41,540.739.99
  • Balance Sheet Strength
    In Q2 2019, Genting Bhd has RM 33.3 billion in non-current liabilities & a total of RM 58.2 billion in total equity. Hence, it has a gearing ratio of 57.26%. In addition, Genting Bhd has reported to have RM 38.0 billion in current assets and RM 9.9 billion in current liabilities. Hence, it has a current ratio of 3.84.
  • Major Shareholders
    Tan Sri Lim Kok Thay is the main shareholder of Genting Bhd with direct shareholdings of 1.77% and indirect shareholdings of 42.35% through his stakes in Kien Huat Realty Sdn Berhad (KHR) and First Names Trust Company (Isle of Man) Limited (FNTC).

    Tan Sri Lim Kok Thay is appointed as Chairman and Chief Executive of Genting Bhd. His son, Lim Keong Hui is the Deputy Chief Executive of Genting Bhd.
  • P/E Ratio
    As of 24 November 2019, Genting Bhd is trading at RM 6.05 a share. As such, it has a current P/E Ratio of 15.12. It is meaningless to compare it with its past historical P/E Ratios as Genting Bhd did not deliver growth in shareholders’ earnings over the last 10 years.
  • P/B Ratio
    In Q2 2019, Genting Bhd has net assets of RM 9.03 a share. Thus, it has a current P/B Ratio of 0.67. It is the lowest in 10 years.
  • Dividend Yields
    In 2018, Genting Bhd has paid out 21.5 sen in dividends per share. The company has a dividend yield of 3.55% per annum. It is not meaningful to compare its current dividend yield with its historical dividend yields for the last 10 years. 

VIA’s Verdict 

Since 2011, Genting Bhd has experienced a decline in stock price, reflecting the company’s decline in shareholders’ earnings. 

So, the question is, ‘Do you think that the recent fall in Genting Bhd is a chance for you to buy more of its shares or is Genting Bhd a stock that you would avoid investing altogether?’ 

2 COMMENTS

  1. Hi Marcus, thanks for your feedback. For this write-up, I was more focused on its long-term track record when it comes to both group revenues and profitability. I agreed that additional gaming taxes and levies and casino license fees and machine dealers’ license fees would negatively impact Genting Malaysia. In regards to a 20% pay cut by Tan Sri Lim Kok Thay, the impact is RM 36 million lesser in take-home pay. RM 36 million to a big group like Genting Bhd is less consequential. But, all in all, when assessing Genting, it’s best to look at the big picture – 10-year achievement for Genting Bhd and its listed subsidiaries before making an investment decision on any of them.

  2. You left out the all the Malaysian taxes levied on Genting Bhd for year 2019, which would explain the drop in share price as well as 20% pay cut of the chairman.

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