GGRAsia – Genting Malaysia 3Q net profit up 23 pct

Genting Malaysia 3Q net profit up 23 pct

Nov 27, 2015 Newsdesk Latest News, Rest of Asia, Top of the deck

Third quarter net profit at casino operator Genting Malaysia Bhd rose 22.6 percent year-on-year. Such profit was approximately MYR326.30 million (US$77.1 million) for the three months to September 30, compared to nearly MYR266.12 million in the prior-year period, the company said in a filing to Bursa Malaysia on Thursday.

The firm runs Resorts World Genting (pictured), Malaysia’s only casino resort, and operates casinos in the United States, the Bahamas and the United Kingdom. It reported group wide revenue of MYR2.03 billion for the three months to September 30, down nearly 9 percent from a year earlier.

The Malaysia business’s revenue – referred to in the filing under the heading “leisure and hospitality” but including that from gaming – grew by 9 percent year-on-year in the quarter to nearly MYR1.41 billion, mainly due to “an overall higher volume of business,” the firm said.

The group’s operations in the U.S. – which for accounting purposes include the casino venue Resorts World Bimini in the Bahamas – achieved a 38 percent year-on-year growth in revenue in the quarter, to MYR312.6 million. The firm said the increase was mainly thanks to “a higher volume of business from the Bimini operations and a positive foreign exchange movement of the U.S. dollar against the ringgit Malaysia”.

But in the U.K., the group’s revenue decreased by 60 percent year-on-year to MYR268.7 million “as a result of both lower hold percentage and lower volume of business in its international markets division, which caters to the premium players business,” said Genting Malaysia.

The group’s third quarter pre-tax profit grew by 14 percent year-on-year to MYR425.7 million “mainly due to higher adjusted EBITDA [earnings before interest, taxation, depreciation and amortisation] contributions,” it said. The company reported group wide adjusted EBITDA of MYR744.3 million in the third quarter, up by 29 percent from the prior-year period.

There were no impairment losses for the quarter. But the group did incur pre-opening expenses related to the launch of Resorts World Birmingham in the U.K., a property that had its official opening outside the reporting period, on October 21. The firm also had costs relating to redevelopment work at Resorts World Genting in Malaysia, under what is known as the Genting Integrated Tourism Plan, and “deferred expenses written off in relation to Bimini”.

“Genting Malaysia’s third quarter 2015 was overall a good set of results; with a strong performance in Malaysia and foreign exchange gains which offset the weak showing in the U.K. (we exclude unrealised foreign exchange gains as some are likely to reverse in the fourth quarter),” wrote analysts Tushar Mohata and Alpa Aggarwal of Japanese brokerage Nomura in a note on Friday.

“In Malaysia, visitation to Genting Highlands (Resorts World Genting) was up 7 percent year-on-year, VIP roll was up again, and a cost rationalisation programme meant adjusted EBITDA margin shot up to 37 percent,” wrote the Nomura analysts.

“Adjusted EBITDA of MYR521 million was the highest in the last seven quarters,” they added, referring to the Malaysia casino resort.