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Business Times
15-05-2025
- Business
- Business Times
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. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up 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.
Free Malaysia Today
09-05-2025
- Business
- Free Malaysia Today
Bursa scrutinises Genting Malaysia's buyout of loss-making US unit
Some analysts said Genting Malaysia's acquisition of Empire Resorts is expensive and potentially profit-dilutive. (File pic) PETALING JAYA : Bursa Malaysia Securities Bhd has grilled Genting Malaysia Bhd (GENM) over its proposed US$41 million (RM177 million) buyout of loss-making Empire Resorts Inc (ERI) from the Genting group's founding Lim family. The bourse regulator slapped the gaming and resort operator yesterday with 20 questions on the deal, which raised eyebrows among some analysts and investors. GENM announced last Friday it is acquiring the remaining 51% stake in Genting Empire Resorts LLC (GERL) it does not currently own for US$41 million from Kien Huat Realty III Ltd, a vehicle of the Lim family led by Lim Kok Thay, the son of Genting founder Lim Goh Tong. The group currently has a 49% interest in GERL, which wholly owns ERI that has gaming properties in New York state. Under the deal, Kien Huat Realty III will also assign a US$39.7 million (RM170 million) debt to GENM that ERI owes to it. Some analysts have labelled the acquisition as expensive and potentially profit-dilutive, and will likely be a financial drag on the group. Concerns have also been raised that it is an unfavourable related party transaction (RPT). That Bursa slapped GENM with 20 questions perhaps reflects the greater scrutiny the regulator has on the transaction, which has garnered keen investor interest. It asked GENM to state the rationale for acquiring the remaining 51% in GERL given the latter had already invested substantially in the preferred stocks of ERI, which is convertible to common stocks in the company. Bursa also wanted GENM to state the justifications for the purchase consideration of US$41 million, and to justify the premium paid for the 51% interest in GERL. It sought a clarification on whether the market value range of the common stock of US$36.5 million to US$46.9 million is the market value ascribed for 100% interest in ERI. The regulator also wanted details on the liabilities and guarantee to be assumed by GENM arising from the proposed acquisition. Bursa asked the group to explain the increase in its total borrowings from RM12.22 billion to RM13.49 billion post-acquisition. In its reply, GENM said the acquisition falls within the independently assessed market value range of US$36.5 million to US$46.9 million for ERI. It added the valuation was performed by independent valuer CBRE Securities LLC on April 22, 2025. It said no additional liabilities, including contingent liabilities and guarantees, will be assumed by the company, aside from paying the purchase price. It said GERL posted a net loss of US$54.1 million for the financial year ended Dec 31, 2024 (FY2024), down from US$65.4 million in FY2023. It incurred a US$53.4 million net loss in FY2022. ERI, meanwhile, posted a lower net loss of US$53.1 million in FY2024 from US$57 million in FY2023, but higher than US$44.2 million in FY2022. GENM said ERI will concentrate on increasing gaming revenues for its Resorts World Catskills by broadening its demographic reach to key upstate markets. However, it cautioned there is no guarantee ERI will be able to maintain a positive trajectory in its financial and operational performance. GENM's investments in ERI prior to the latest acquisition totalled US$724.4 million (RM3.1 billion), after it made several capital injections through common and preferred stocks in recent years. According to its 2024 annual report, the 73-year-old Kok Thay and his son, Keong Hui, 40, have a deemed interest of 49.35% in GENM as of March 17, 2025. Kok Thay is GENM's deputy chairman and chief executive while Keong Hui is the group's deputy chief executive and executive director. In a recent note, Public Investment Bank said the deal was an 'unfavourable' RPT that suggests 'corporate governance remains a concern' for GENM. GENM's shares closed 3 sen or 1.7% higher at RM1.76, valuing the group at RM10.45 billion. Year to date, the counter has fallen 22%.
Free Malaysia Today
09-05-2025
- Business
- Free Malaysia Today
Genting's RM3.1bil bet on New York gaming may backfire
Genting Malaysia has invested US$724.4 million (RM3.1 billion) in Empire Resorts Inc since 2019. (Resort World Genting pic) PETALING JAYA : Genting Malaysia Bhd (GENM) has ramped up its bet on New York's gaming sector with its proposed takeover of Genting Empire Resorts (GERL), a move that some analysts say may backfire on the group. The deal has been flagged as expensive and potentially profit-dilutive by analysts and will likely be a financial drag on the integrated gaming and resort operator. The takeover also raised eyebrows as it is a related party transaction (RPT) involving the Genting group's founding Lim family led by Lim Kok Thay, who is also GENM's deputy chairman and chief executive. According to its 2024 annual report, the 73-year-old Lim and his son, Keong Hui, 40, have a deemed interest of 49.35% in GENM as of March 17, 2025. Keong Hui is the group's deputy chief executive and executive director. GENM is acquiring the remaining 51% stake in GERL that it does not own for US$41 million (RM177 million) from the Lim family's vehicle Kien Huat Realty III Ltd. The group currently holds a 49% interest in GERL, which wholly owns Empire Resorts Inc (ERI) that has gaming properties in New York state. As part of the deal, Kien Huat Realty III will also assign a US$39.7 million (RM170 million) debt to GENM that ERI owes to it. ERI owns and operates integrated casino Resorts World Catskills and video lottery terminal Resorts World Hudson Valley, along with mobile sports betting platform Resorts World Bet. GENM's RM3.1 billion investment GENM's investments in ERI prior to the latest acquisition totalled US$724.4 million (RM3.1 billion), after it made several capital injections through common and preferred stocks in recent years. Public Investment Bank (PublicInvest) has downgraded GENM to a 'trading sell' from 'neutral' in light of the proposed acquisition. In a recent note, it said the deal was an 'unfavourable' RPT that suggests 'corporate governance remains a concern' for the group. It views the group's US$724.4 million investment in ERI as 'financial assistance' to ensure the company remains operational under a competitive business environment in the US. PublicInvest noted that ERI remains a loss-making unit since GENM's initial acquisition back in 2019. 'After more than five years, the group has failed to turnaround ERI. We view this related party transaction negatively as it is likely to drag the group further with a higher share of losses,' it said. It added that between FY2020 and FY2024, GENM recognised total associated losses of RM160-RM280 million a year, the bulk of which it attributes to ERI. Meanwhile, US research firm CreditSights said the group's takeover of GERL is 'credit negative' due to the increased debt to support ERI's weak earnings outlook, and concerns over related party transactions. CreditSights, a Fitch Solutions company, said the deal will increase GENM's debt by US$300 million (RM1.3 billion) and worsen its leverage metrics by 0.3 to 0.4 times. It also said ERI's earnings outlook remains weak, pressured by competition and losses at its two New York resorts. However, it expects ongoing support for ERI from GENM as it has invested almost US$725 million in the business and views it as key to its New York expansion, lowering the refinancing risk for its US$300 million bond due in 2026. GENM's shares closed 1 sen or 0.6% lower at RM1.73 yesterday, valuing the group at RM10.27 billion. Year to date, the counter has fallen 23%.
New Straits Times
05-05-2025
- Business
- New Straits Times
Genting Malaysia's US$41mil buyout of Empire Resorts flagged as pricey, profit-dilutive
KUALA LUMPUR: Genting Malaysia Bhd's (GenM) move to acquire the remaining 51 per cent stake in Genting Empire Resorts LLC (GERL) for US$41 million (about RM177 million) is being flagged by analysts as expensive and potentially profit-dilutive. Hong Leong Investment Bank (HLIB) highlighted that the deal values GERL at an enterprise value-to- earnings before interest, taxes, depreciation, and amortisation multiple of 72.7 times — far above the industry average of around 10 times for US-listed casino operators such as Las Vegas Sands, MGM Resorts, and Wynn Resorts. "Given the stark premium relative to sector benchmarks, we consider the proposed transaction to be pricey," HLIB said in a note on Monday. GERL owns Empire Resorts, which operates Resorts World Catskills, Resorts World Hudson Valley, and the mobile betting platform Resorts World Bet. The acquisition also includes the assumption of a US$39.7 million (RM171 million) intercompany loan from Empire Resorts to Kien Huat Realty III Ltd — the Lim family's private investment vehicle. Subject to regulatory approvals, the acquisition is expected to be complete in the second quarter of FY2025. Although the deal will give GenM full control of Empire Resorts, HLIB warned it could pressure the group's financials. Total borrowings may rise by RM1.3 billion, lifting the gearing ratio from 1.04 times to 1.15 times and adding up to RM70 million in annual interest costs by FY2026–2027. Since acquiring a 49 per cent stake in Empire Resorts from Kien Huat Realty in 2019 for US$128 million, GenM has struggled to turn the business around. While HLIB acknowledged potential synergies and operational efficiencies across the Resorts World brand, it expects losses from GERL to widen, with GenM's share of losses potentially increasing by RM23 million in FY2025 — translating to a possible 3.5 per cent earnings hit over the next three years. Following its annual update, HLIB raised core earnings forecasts for FY2025 and FY2026 by 5 per cent and 1 per cent, respectively, and introduced an FY2027 core PATMI forecast of RM728.7 million (a 10 per cent year-on-year increase). However, it has not yet factored in the acquisition due to its pending completion. With GenM's share price falling 26 per cent since its 4Q 2024 results, HLIB has upgraded the stock to Hold (from Sell) but trimmed its target price to RM1.80 (from RM1.99), reflecting the acquisition's risks. Meanwhile, PublicInvest Research remained bearish, projecting that Empire Resorts will continue to incur losses due to market cannibalisation following the December 2022 launch of Resorts World Hudson Valley. "Between FY2020 and FY2024, GenM has recognised total associated losses of RM160 million to RM280 million a year, which we attribute the bulk of this to Empire Resorts, the firm said in a note. PublicInvest downgraded Genma to "Trading Sell" and slashed its target price to RM1.66 (from RM2.53), citing the deal's potential to delay earnings recovery and concerns over corporate governance, calling the related party transaction "unfavourable.
