Shares of Genting companies in Malaysia slide as investors react to Genting Singapore's leadership change, weak results
[KUALA LUMPUR] Shares of Genting-linked companies tumbled on Thursday (May 15) as investors digested a surprise CEO exit at Genting Singapore and fresh concerns over corporate governance, amid broader weakness in Malaysia's equity market.
At the market close on Thursday, Bursa Malaysia-listed Genting Bhd dipped 2.1 per cent or 7 sen at RM3.22, while Genting Malaysia fell 1.1 per cent or 2 sen to RM1.76.
The declines came after Genting Singapore announced on Wednesday that its chief executive officer Tan Hee Teck will retire effective May 31. He will also step down as CEO and chairman of Resorts World Sentosa (RWS).
Lim Kok Thay, the executive chairman of the Genting Group, will become acting CEO from Jun 1. RWS president and chief financial officer Lee Shi Ruh will become RWS CEO, also from Jun 1.
The leadership change coincided with a disappointing quarterly earnings report from Genting Singapore. First-quarter revenue dropped 20 per cent year-on-year to S$626.2 million, while net profit fell 41 per cent to S$145 million.
While some investors linked the stock reaction to Tan's retirement, analysts suggest the weakness in Genting-related counters reflects broader market trends and lingering concerns over governance.
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Neoh Jia Man, portfolio manager at Tradeview Capital, said the declines appear to be in line with the broader weakness across Malaysian large-cap stocks on Thursday.
'Persistent share price weakness likely stems from ongoing corporate governance concerns, notably the recurring related party transactions, including the recent Empire Resorts buyout, perceived as unfavourable to minority shareholders,' he told The Business Times.
Genting Bhd is the holding company of the Genting Group, which owns 52.6 per cent of Genting Singapore and 49.3 per cent of Genting Malaysia.
The conglomerate has business interests spanning leisure and hospitality, plantations, power generation, property development and life sciences across nine countries, with a workforce of 54,000.
Controversial Empire Resorts deal
Governance issues resurfaced recently after Genting Malaysia proposed a US$41 million deal to acquire full control of Empire Resorts from Kien Huat Realty III, a private entity owned by the Lim family, led by Genting Group executive chairman Lim.
The acquisition will increase Genting Malaysia's stake in Empire Resorts to 100 per cent from 49 per cent, making it a wholly owned subsidiary.
A remisier, speaking anonymously, pointed out that Genting Malaysia's investment in Empire Resorts, exceeding US$724 million since 2019 and executed in multiple stages, raises concerns that the board may have strategically avoided seeking comprehensive minority shareholder approval for the entire series of related-party transactions, potentially compromising shareholder protections.
On May 8, Bursa Malaysia raised 20 questions on the deal, which involves Empire Resorts' gaming assets in New York, including Resorts World Catskills and Resorts World Hudson Valley. Empire Resorts reported a net loss of US$53.1 million in FY2024, narrowing from US$57 million a year earlier.
In a recent report, Maybank Investment Bank flagged the proposed buyout as another 'value-destroying related-party transaction.'
Analyst Yin Shao Yang said that with Empire becoming a subsidiary, Genting Malaysia will have to consolidate US$300 million in senior secured notes, pushing its estimated 2025 net gearing to 98 per cent, from 79 per cent previously.
Still, potential catalysts remain. 'These include a possible resolution to the US$600 million lawsuit involving Resorts World Bimini and a decision on a full casino licence for Resorts World New York by year-end,' added Yin.
For the financial year 2024, Genting Bhd posted revenue of RM27.7 billion, up 2.2 per cent year on year, while net profit fell 13 per cent to RM2 billion. Singapore operations contributed 31 per cent of revenue, with Malaysia at 30 per cent, and the rest from operations in the US, the UK, Egypt and the Bahamas.
Share prices dip after reshuffle
Malaysia's Genting Group, one of Asia's largest family-run conglomerates, underwent a leadership reshuffle earlier this year as long-time chief Lim stepped down as Genting Bhd CEO after nearly two decades at the helm.
The 73-year-old tycoon announced the transition on Feb 27, appointing Tan Kong Han as his successor. Lim remains as executive chairman of the group.
At Genting Malaysia Bhd, Lim continues to serve as deputy chairman and CEO. His son, Lim Keong Hui – representing the third generation of the Lim family – took over as CEO of Genting Plantations in March, succeeding Tan. The younger Lim is also deputy CEO and executive director at both Genting Bhd and Genting Malaysia.
Since the announcement, shares across the Genting Group have trended lower, a decline analysts attributed more to broader market conditions and concerns surrounding the Empire Resorts acquisition than to the leadership change itself.
As at Thursday, Genting Bhd shares had fallen 2 per cent to RM3.22 from RM3.29 on Feb 28. Genting Malaysia declined 7.4 per cent to RM1.76 from RM1.90, while Genting Plantations dropped 12.3 per cent to RM4.97 from RM5.67 over the same period.
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