Latest news with #GenM
The Star
03-06-2025
- Business
- The Star
Rising number of tourists to lift Genting's earnings
PETALING JAYA: As Genting Bhd began its new financial year with a disappointment amid lacklustre performances from all its gaming units, analysts have downgraded their earnings projections for the stock. Nevertheless, the market remains bullish on the conglomerate, with the majority of analysts keeping a 'buy' call. In fact, UOB Kay Hian Research (UOBKH Research) upgraded its rating to 'buy' after Genting's results announcement on May 29. Genting, which dropped off the FBM KLCI list last December, saw lower than-expected contributions from gaming operations in Singapore, Malaysia, Britain and the United States in the first quarter of the year (1Q25). Despite higher contributions from the plantations and power businesses, Genting's adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) slumped 22.7% year-on-year (y-o-y) to RM2bil with revenue dropping 12.4% y-o-y to RM6.5bil. Following this, TA Research cut its earnings for this year (FY25) by 47% and 68% for FY26. This was done after revising lower the earnings forecasts for Genting Singapore Ltd and Resorts World Las Vegas, as well as incorporating Genting Malaysia Bhd 's (GenM) revised earnings projections. UOBKH Research, on the other hand, believes GenM's profitability remains intact. However, it said it thinks that unfavourable capital management, a potential capital expenditure upcycle that may pressure gearing, and finance costs may result in longer period of valuations de-rating. 'Key re-rating catalysts include winning another New York casino tender. With the share price correcting 19% year-to-date, valuations appear depressed below the mean with a palatable 5.5% to 7% dividend yield,' the research house said. Hong Leong Investment Bank Research (HLIB Research) said it has cut its earnings forecast for Genting by 26% for FY25 and 27.6% for FY26. HLIB Research, which is one of the research houses that has cut its target price for the Genting, continues to like Genting for its well-established operational presence across diverse regions, mitigating regulatory and geographical risks. Going forward, it expects Genting to benefit from the stronger tourist arrivals in both Singapore and Malaysia. 'Besides, Genting has the potential value-add with its stake in TauRx Pharmaceutical Ltd in Scotland if its drug, hydromethylthionine mesylate (HMTM) receives US Food and Drug Administration approval.' Genting has a 20.3% stake in the pharmaceutical company. On GenM, Kenanga Research expects the company to see 'better days beyond FY25'. It said Resorts World Genting is seeing more local visitors, along with Singaporeans and Indonesians. Mainland Chinese and Indian tourists are also expected to increase as Malaysia builds up momentum towards welcoming 36 million visitors in Visit Malaysia 2026. 'The Ebitda margin is expected to improve marginally and gradually from current 26% towards 27% to 25% over FY25 to FY26 on improving visitor numbers. 'GenM's US operations should see softer but still firm earnings from Resorts World New York City on rising risk of slower local economic growth coupled with full consolidation of still loss-making Empire Resorts Inc. 'The group's British and Egypt operations are also expected to report firm earnings with rising risk of some softening,' added Kenanga Research.
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.
