What You Must Know About Genting Berhad

Genting Bhd is one of the largest corporations in Malaysia. Since 2003, under the leadership of Tan Sri Lim Kok Thay, Genting Bhd has transformed from a local conglomerate into a leading multi-national organization which is engaged in a variety of industries which include gaming, leisure, hotels, oil palm plantations, property development and power generation activities.

As I write, Genting Bhd is worth RM 36.97 billion in market capitalization. It is one of the 30 constituents of the FTSE-KLCI. In this article, I’ll cover 8 key things you need know about Genting Bhd before you invest.

#1: Stock Symbol

Ticker Symbol: KLSE: GENTING / KLSE: 3182
Market Capitalization: RM 36.97 Billion (5 October 2017)

Share Price: RM 9.60 (5 October 2017)

Industry: Gaming

Syariah Compliant: No

#2: The Business

Genting Bhd derives income from 3 main listed subsidiaries. They are:

1. Genting Malaysia Bhd

   Genting Bhd owns 49.3% shareholdings of Genting Malaysia Bhd (GENM). GENM derives income from Resorts World Genting, Resorts World New York City, Resorts World Bimini, Resorts World Birmingham and 43 casinos across the United Kingdom. GENM has contributed RM 8.93 billion in revenues for 2016. Thus, it remains as the main source of income to Genting Bhd.
   

2. Genting Singapore Plc

   Genting Bhd owns 52.84% shareholdings of Genting Singapore Plc, the owner of Resorts World Sentosa. Listed on 12 December 2005, Genting Singapore Plc is currently one of the 30 constituents of the Straits Times Index (STI) in Singapore. In 2016, Genting Singapore Plc has contributed S$ 2.28 billion in revenues. As such, it is the second largest source of income to Genting Bhd.
   

3. Genting Plantations Bhd

   Genting Bhd owns 51.21% shareholdings of Genting Plantations Bhd. In 2016, it has 131,159 hectares of oil palm plantation estates located in Malaysia and Indonesia. Today, it is the third largest listed palm oil companies on Bursa Malaysia. In 2016, Genting Plantations Bhd has contributed RM 1.48 billion in revenues. Thus, it is currently the third largest income contributor to Genting Bhd.

#3: The Financials

Genting Bhd has recorded a decline in shareholders’ earnings, down from RM 3.98 billion in 2012 to RM 1.39 billion in 2015. This is due to substantial drop in profits derived from Genting Singapore Plc during the 4-year period.

In 2016, Genting Malaysia Bhd has recognized an one-off gain of RM 1.27 billion from the disposal of Genting Hong Kong Ltd. This disposal gain has also been included in the financials of Genting Bhd. As such, this has lifted Genting Bhd’s shareholders’ earnings from RM 1.39 billion in 2015 to RM 2.15 billion in 2016.

Source: Annual Reports of Genting Bhd

#4: Growth Plans

Genting Bhd has revealed the following plans to grow:

Genting Malaysia Bhd

Resorts World Genting is embarking on a 10-Year Genting Tourism Integrated Plan to revamp itself to solidify its position as one of the leading tourist destinations in Malaysia. This development includes the 20th Century Fox Theme Park, the First World Hotel Tower 3, Awana Skyway, SkyAvenue Mall and many more attractions. As at 30 June 2017, Genting Malaysia Bhd has already invested RM 5.5 billion into this development.

 Genting Singapore Plc

1. In the first four months of 2017, Resorts World Sentosa has brought in 36% of international visitor arrivals in Singapore. The Universal Studio Singapore is voted as the leading amusement park in Asia. Its integrated resort hotels enjoyed 95% in occupancy rate.
   
   At present, Genting Singapore Plc is following the progress of the Japan IR Execution Bill which will pave the way for the formal bidding process of the gaming license in Japan. On 20 September 2017, Genting Singapore Plc has established a branch office in Tokyo, Japan for the purpose of research, market studies, development and management of leisure and hospitality business in Japan.

Genting Plantations Bhd
As at 31 December 2016, Genting Plantations Bhd has 38,468 hectares of oil palm plantations. Also, it has 112,196 hectares of land bank which are unplanted. These would ensure sustainable growth in fresh fruit bunches (FFB) over the short and long-term in the future.

#5: Risks

Genting Bhd faces several risks which include:

1. Foreign Exchange

   In 2016, Genting Bhd derived 62.9% of its total revenues from overseas. As such, Genting Bhd is subjected to the risk of adverse movements in foreign currencies mainly the Singapore Dollar and the U.S. Dollar against Ringgit Malaysia.
   

2. Mashpee Wampanoag Tribe

   Genting Malaysia Bhd has invested US$ 347.4 million in promissory notes issued by Mashpee Wampanoag Tribe to finance the expenses of pre-development of an integrated gaming resort in Taunton, Massachusetts, the United States. This project is put on hold due to court disputes. Genting Malaysia Bhd is exploring on options of the recoverability of its investment on the promissory notes.
   

3. Palm Oil Prices

   Inevitably, Genting Plantations Bhd faces the risk of adverse movements in palm oil prices. In the 1st half of 2017, Genting Plantations Bhd has reported its average sales prices of CPO and PK to be RM 2,861 and RM 2,513 per tonne respectively.

#6: Valuation

As I write, Genting Bhd is trading at RM 9.60 a share. In 2016, Genting Bhd had recorded RM 0.577 in earnings per share (EPS). Thus, its current P/E Ratio works out to be 16.64. Also, as at 30 June 2017, Genting Bhd has reported to have RM 9.21 in net assets a share. Thus, its current P/B Ratio works out to be 1.04.

#7: Investors Relation

For further enquiries on Genting Bhd’s Investors Relation matters, you may contact its share registrar:

 

Telephone: (603) 2178 2266

Email: gbinfo@genting.com

#8: Major Shareholders

As at 2 March 2017, the substantial shareholders of Genting Plantations Bhd are:

– Kien Huat Realty Sdn Berhad: 39.68%

– JP Morgan Chase Bank, National Association (U.S.A): 5.88%

– Credit Suisse (SG-BR-TST-TEMP): 5.64%

– Credit Suisse (SG-BR-TST-ASING): 4.61%

– GIC Private Limited for Government of Singapore (C): 2.54%

What Do You Think Of  Genting Bhd As An Investment? Will You Invest In It? Share Your Views Below

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The information provided is for general information purposes only and is not intended to be any investment or financial advice. All views and opinions articulated in the article were expressed in Ian’s personal capacity. It does not in any way represent those of his employer and other related entities. Ian does not own any companies mentioned.

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