Latest news with #GENM
BusinessToday
4 days ago
- Business
- BusinessToday
Analysts Downgrade Genting Malaysia, After Sharp Drop In Q1 Profits
CIMB Investment Bank Bhd (CIMB Securities) has downgraded Genting Malaysia Bhd (GENM) to HOLD from Buy, with a sharply lower target price of RM1.95 from RM2.45, while Hong Leong Investment Bank (HLIB) has reiterated its HOLD call with a revised target price of RM1.82, as both research houses flagged significant earnings pressure from weaker-than-expected performance across domestic and international operations. GENM's core net profit for the first quarter of FY25 fell 78% year-on-year to RM52 million, which CIMB said was impacted by a broad-based earnings decline across Resorts World Genting (RWG), the US, and UK segments, compounded by higher net interest cost and an elevated effective tax rate. The results were well below expectations, coming in at only 9% and 8% of CIMB Securities' and consensus full-year forecasts, respectively. HLIB similarly noted that GENM's RM31.1 million core profit for the quarter missed its projection by a wide margin, at just 6% of its FY25 estimate. RWG's gross gaming revenue (GGR) was a key concern, declining 7% year-on-year and 9% quarter-on-quarter, driven mainly by a significant drop in VIP play, which fell 18% year-on-year. Although mass market GGR grew by 7%, it was not enough to offset the overall weakness. CIMB Securities highlighted that hilltop visitations dipped 2% year-on-year, likely impacted by the earlier timing of Hari Raya compared to 2024, which affected non-gaming activities. Meanwhile, EBITDA for the group fell 11% year-on-year to RM869 million, with EBITDA margins shrinking to 31.9%. In the US and Bahamas, EBITDA contracted 22% year-on-year, pressured by higher labour costs and a weaker US dollar against the ringgit. In the UK and Egypt, earnings fell 25% year-on-year under similar conditions, though they were flat quarter-on-quarter. Share of associate losses from Empire Resorts also widened sequentially. HLIB noted that while revenue in the US & Bahamas rose 8.6% quarter-on-quarter, group-wide earnings recovery was insufficient to match past performance due to structural headwinds in international markets. CIMB Securities revised its core earnings estimates down by 37–39% for FY25–27, expecting a 29% drop in FY25 earnings before a modest 12% recovery in FY26, aided by anticipated tourist inflows during Visit Malaysia Year. HLIB likewise slashed its forecasts by 36–40%, citing persistently high finance costs, tax burdens and operating volatility in the US. Despite the earnings headwinds, both brokers pointed out GENM's dividend yields remain relatively attractive at 5.5–6.6% over FY25–27. However, CIMB Securities stressed that valuation at an FY25 EV/EBITDA of 8.3x is only modestly attractive, trading at a 12% discount to its 10-year pre-COVID average. Upside risk remains in the form of a possible full casino licence in Downstate New York, which CIMB Securites estimates could add 40–50 sen to its target price. GENM shares closed at RM1.82 on 30 May, giving the group a market capitalisation of RM10.26 billion. Related
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%.
Daily Express
09-05-2025
- Business
- Daily Express
Genting's RM3.1 billion bet on New York gaming may backfire
Published on: Friday, May 09, 2025 Published on: Fri, May 09, 2025 By: Lee Min Keong, FMT Text Size: 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%. * Follow us on Instagram and join our Telegram and/or WhatsApp channel(s) for the latest news you don't want to miss. * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
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%.
