GGRAsia – GEN Malaysia 2Q profit doubles despite VIP volume dip

GEN Malaysia 2Q profit doubles despite VIP volume dip

Aug 30, 2018 Newsdesk Latest News, Rest of Asia, Top of the deck

Casino operator Genting Malaysia Bhd and its parent Genting Bhd respectively reported their second-quarter results on Wednesday.

Profit at Genting Malaysia rose 104 percent year-on-year for the quarter, despite what Japanese brokerage Nomura said was a 21 percent year-on-year decline in VIP gambling volume in the period.

Such profits were MYR395.7 million (US$95.9 million), on revenue that rose 5.7 percent year-on-year for the quarter, to MYR2.42 billion, said Genting Malaysia in a filing to Bursa Malaysia.

The firm, which operates a casino outside the Malaysian capital Kuala Lumpur, as well as properties in the United States and the Bahamas; and in the United Kingdom and Egypt, declared an interim, single-tier dividend of MYR0.06 per ordinary share, payable on September 19 to shareholders registered as of September 14.

Analyst Samuel Yin Shao Yang of Maybank IB Research said Genting Malaysia had delivered “decent results given the challenging second-quarter environment”.

Nomura analysts Tushar Mohata and Rahul Dohare stated in a Wednesday memo on Genting Malaysia: “Casino revenues were up just 3 percent, as VIP volume fell 21 percent and mass volume fell 1 percent: we attribute this to the World Cup-related disruption as high-roller business declined.” They were referring latterly to an international soccer tournament that took place in Russia in June and July.

The casino operator reported group-wide adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) of MYR701.8 million for the three months to June 30, up 31.1 percent from the prior-year period.

Genting Malaysia said in a press release: “The group’s overall adjusted EBITDA was aided by lower foreign exchange translation losses on its U.S. dollar-denominated assets of MYR14.4 million recorded in first half 2018 compared to MYR53.2 million reported in the same period last year.”

The Nomura analysts stated, referring to two new theme parks at the Malaysian casino venue – Resorts World Genting – under a major multi-year revamp for the site: “The indoor theme park is now scheduled to open by fourth quarter 2018 (delayed from third quarter 2018) and [20th Century] Fox World by first half 2019 (delayed from end-2018).”

Genting Malaysia said in a press release filed to Bursa Malaysia on Wednesday that in the second quarter its Malaysian leisure and hospitality business recorded revenue up 10 percent to MYR1.59 billion while quarterly adjusted EBITDA had grown by 24 percent to MYR540.2 million.

It said this was “mainly attributable to an improved hold percentage in the mid- to premium-players segment.”

It added that the “new facilities and attractions” already opened at Resorts World Genting under the Genting Integrated Tourism Plan – a major revamp of the property – had been “well received” and had also contributed to improvement in those business indicators.

Parent profit down

At parent Genting Bhd – which gets a share of profits not only from Genting Malaysia but also from Genting Singapore Ltd, operator of Resorts World Sentosa in Singapore – second-quarter profit actually fell 15.6 percent year-on-year, it told the Malaysian bourse.

Such quarterly profit was MYR383.5 million, on quarterly revenue that slipped 2.6 percent year-on-year, to MYR4.82 billion.

The parent nonetheless declared an interim single-tier dividend of MYR0.085 per ordinary share.

Mr Yin of Maybank IB Research noted in a memo regarding Genting Bhd: “Second-quarter headline net profit of MYR383.5 million was suppressed by MYR206.5 million net fair value loss on a bio-renewable energy investment.”

The Nomura analysts said in their separate note regarding Genting Bhd, that the firm’s revenue decline had been “due to weakness in Singapore, U.S.A. operations and plantation business”.

In early August Genting Singapore had reported higher second-quarter profit despite a fall in revenue.

Genting Bhd stated in an earnings press release issued to Bursa Malaysia that regarding the prospect of a casino licence in Japan, Genting Singapore had been “gearing up for this expansion opportunity and has been hiring a new team of Japanese nationals in different disciplines to prepare for the bid”.

The parent said that in the U.K. market, the Genting Malaysia unit “remains resolute in delivering sustainable performance by managing business volatility in the premium players segment”.