8 Things To Know About Genting Malaysia Bhd Before You Invest

In 1965, the late Tan Sri Dato’ Seri Dr. Lim Goh Tong (LGT) has founded Genting Highlands Bhd and initiated the construction of access road from Genting Sempah to the peak of the Ulu Kali Mountain. For the next 40 years, LGT has laid a solid foundation of the Genting Group, which resulted in Genting Highlands being one of the most popular gaming & tourist destinations in Malaysia.

In 2003, LGT has handed over the Chairmanship of the Genting Group to his son, Tan Sri Lim Kok Thay (LKT). It was the beginning of Genting’s transformation journey from a local player to become an international integrated resort operator. As I write, Genting Malaysia Bhd, a 49.3%-owned subsidiary of Genting Bhd, owns and operates major resort destinations in Malaysia, the United Kingdom, the United States and Bahamas.

Listed On Bursa Malaysia, I’ll cover 8 things you need to know about Genting Malaysia Bhd (KLSE:GENM) before you invest.

#1: Stock Symbol

Ticker Symbol: KLSE: GENM / KLSE: 4715
Market Capitalization: RM 31.88 Billion (28 September 2017)

Share Price: RM 5.36 (28 September 2017)

Sector: Tourism

Industry: Gaming

Syariah Compliant: No

#2: The Business

Genting Malaysia Bhd has four major resort properties. They include:

1. 1. Resorts World Genting (RWG)

      RWG remains as the trophy asset to Genting Malaysia Bhd. It has 6 hotels, theme parks, entertainment attractions, retail and dining outlets, international shows and business convention facilities. In 2016, RWG has recorded 20.2 million visitors with 29% of visitors were hotel guests. Out of which, RWG has derived RM 5.62 Billion and RM 1.89 Billion in revenues and EBITDA (Earnings before Interest, Taxes, Depreciation & Amortization) respectively.
      

   2. Genting United Kingdom (UK)

      Genting’s UK operations consist of 43 casinos and Resorts World Birmingham (RWB). This includes 4 prestigious brands such as Crockfords, the Colony Club, Maxims Casino Club, and the Palm Beach. Thus, Genting is currently the UK’s largest casino operator. In 2016, Genting UK has contributed RM 1.82 Billion and RM 288.0 Million in revenues and EBITDA.
      

• Genting in the United States & Bahamas

Genting is the proud owner of Resorts World Casino New York City (RWNYC). It is equipped with over 5,500 video gaming machines and has attracted 8.2 million visitors in 2016. In Bahamas, Genting operates the Resorts World Bimini (RWB). Collectively, Genting’s US & Bahamas operations had contributed RM 1.37 Billion and RM 193.4 Million in revenues and EBITDA.

#3: The Financials

Overall, Genting Malaysia Bhd has reported growth in group revenues, up from RM 7.89 Billion in 2012 to RM 8.93 Billion in 2016. This was attributed to stable sales performance from RWG and higher sales contributed from RWB and RWNYC.

However, Genting Malaysia Bhd has recorded decline in shareholders’ earnings, down from RM 1.60 Billion in 2013 to RM 1.26 Billion in 2015. This was due to losses incurred from RWNYC and RWB during the 2-year period.

In 2016, Genting Malaysia Bhd has recorded RM 2.88 Billion in shareholders’ earnings. This is because, in that year, it has recognized an one-off gain of RM 1.27 Billion from the disposal of its interest in Genting Hong Kong Ltd. As such, I’ve excluded the one-off gain from the calculation of Return on Equity (ROE) for Genting Malaysia Bhd in 2016.

Figures in RM Million

Year	2012	2013	2014	2015	2016
Sales	7,893	8,328	8,229	8,396	8,932
Earnings	1,403	1,603	1,189	1,258	2,880
ROE	10.7%	10.4%	7.3%	6.6%	8.1%

#4: Growth Plans

Genting Malaysia Bhd is embarking on:

1. Genting Integrated Tourism Plan (GITP)

   Launched in 2003, the GITP is a 10-Year Master Plan to cement RWG’s position as the leading tourism destination in Malaysia. Costing RM 10.38 Billion, the GITP includes the development of the world’s first Twentieth Century Fox World Theme Park, the First World Hotel Tower 3, Awana Skyway, SkyAvenue Mall, SkyPlaza, and many more exciting attractions. As at 30 June 2017, Genting Malaysia Bhd has already invested RM 5.5 Billion into the GITP.
   

2. RWNYC Non-Gaming Expansion

   In July 2017, Genting Malaysia Bhd has started its non-gaming expansion programme. Costing US$ 400 Million, it consists of the development of a new 400-room hotel, additional gaming space, and a variety of dining, entertainment, and retail experiences. It is scheduled to be completed by 2019.

#5: Major Risk

On 1 April 2016, Genting Malaysia Bhd has subscribed to the promissory notes totalling US$ 347.4 Million issued by the Mashpee Wampanoag Tribe (Tribe) to finance the pre-development expenses of an integrated gaming resort in Taunton, Massachusetts, the United States.

The construction of this resort was put on hold pending further on court developments or actions by relevant government authorities. At present, Genting Malaysia Bhd is working with the Tribe to review all options available for its investment on the promissory notes, assess its recoverability and its impact to the group’s financial results for 2017.  

#6: Valuation

As I write, Genting Malaysia Bhd is trading at RM 5.36 a share.

If I exclude the one-off gain of RM 1.27 Billion from the disposal of its interest in Genting Hong Kong Ltd, Genting Malaysia Bhd’s shareholders’ earnings and earnings per share (EPS) would be RM 1.61 Billion or 28.4 sen in 2016. As such, Genting Malaysia Bhd’s current P/E Ratio works out to be 18.87.

As at 30 June 2017, Genting Malaysia Bhd has reported to have RM 3.41 in net assets a share. Thus, Genting Malaysia Bhd’s current P/B Ratio works out to be 1.57.

#7: Investors Relation

For further enquiries on Genting Malaysia Bhd’s Investors Relation matters, you may reach them via:

Website: http://www.gentingmalaysia.com/investor_relations/

Email: ir.genm@genting.com

Phone: + (60) 3 2178 2288

#8: Major Shareholders

As at 15 March 2017, the substantial shareholders of PPB Group Bhd are:

– Genting Bhd: 49.32%

– JP Morgan Chase Bank, National Association (U.S.A): 3.75%

– Great Eastern Life Assurance (Malaysia) Bhd (PAR 1): 1.70%

– GIC Private Limited for Government of Singapore: 1.43%

– State Street Bank & Trust Company: 1.39%

What Do You Think Of  Genting Malaysia 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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