Maybank Investment Bank Bhd says it hopes the announcement by Genting Malaysia Bhd that it will acquire the remaining stake in the loss-making Empire Resorts Inc in the United States which it does not yet own “will be the last value-destroying related-party transaction” for the Malaysia-based casino operator.
Maybank analyst Samuel Yin Shao Yang wrote in a Monday note that the investment bank was trimming its earnings estimates for Genting Malaysia for full years 2025 to 2027 by two percent to four percent, due to the higher economic interest the firm will hold in Empire Resorts.
“We do not view this [acquisition] proposal positively, but hope that this will be the last value-destroying related-party transaction,” Mr Yin wrote.
Genting Malaysia announced on Friday that it had proposed to acquire the remaining 51 percent of Empire Resorts’ common stock that it does not yet own. The stake is controlled by the Lim family’s private investment vehicle; the Lim family also controls Genting Malaysia and its parent, Genting Bhd.
The deal involves a total cash consideration of US$41 million and is expected to be completed by year-end. It does not require shareholders’ approval, according to a Friday filing by Genting Malaysia to Bursa Malaysia.
“With this proposal, Genting Malaysia would have poured in US$765.4 million into Empire Resorts,” noted Maybank.
Empire Resorts owns three businesses in the U.S. state of New York: casino resort Resorts World Catskills; video lottery terminal casino Resorts World Hudson; and mobile sports betting operation Resorts World Bet.
Although Genting Malaysia currently only owns 49 percent of Empire Resorts’ common stock, its equity accounts for 90 percent of Empire Resorts’ losses, as Genting Malaysia also owns Empire Resorts’ convertible preferred stock.
Despite the negative impact of the Empire Resorts acquisition, Maybank still raised on Monday its rating on Genting Malaysia to ‘buy’ from ‘hold’.
It cited as “key near-term catalysts” the expected resolution “soon” of a US$600-million lawsuit relating to the company’s unit Resorts World Bimini, and “Resorts World New York winning a full casino licence by year-end”. The latter was a reference to an ongoing bidding process for up to three commercial casino licences in downstate New York.
For the whole of 2024, Genting Malaysia reported a profit of nearly MYR251.28 million (US$59.3 million currently), though that was down 42.3 percent year-on-year. Full-year revenue was MYR10.91 billion, up 7.1 percent year-on-year, the firm said in February.
