Nov 25, 2016 Newsdesk Latest News, Rest of Asia, Top of the deck, World  
Third-quarter profit at casino operator Genting Malaysia Bhd rose 70.3 percent year-on-year, to MYR555.73 million (US$125.1 million), compared to MYR326.30 million in the prior-year period.
Analysts Tushar Mohata and Alpa Aggarwal at Japanese brokerage Nomura said improvement in quarterly profit was “due mainly to a tax credit claim of MYR159 million on the Genting Integrated Tourism Plan capital expenditure, for structures that are ready for use”.
They added: “As per management, tax credits should recur in 2017”.
The brokerage further noted that Genting Malaysia’s parent Genting Bhd – which also published its quarterly results on Thursday – had given more guidance on its plans for a new casino resort in the U.S. gaming hub of Las Vegas, titled Resorts World Las Vegas. The scheme broke ground in May 2015.
Genting Malaysia runs Resorts World Genting – Malaysia’s only casino resort – based in an upland area outside the capital, Kuala Lumpur. The company, part of the Genting group, also operates casinos in the United States, the Bahamas and the United Kingdom.
It noted in a press release to the Malaysian stock exchange on Thursday regarding its unaudited results for the three months to September 30: “Higher revenue was recorded for the Malaysian leisure and hospitality business amid the current challenging business environment.”
Neither the press release nor its earnings statement provided much detail on the firm’s gaming operations. Resorts World Genting runs on a casino licence that is renewed quarterly in the Muslim-majority nation.
The company is nonetheless reinvesting heavily in the resort at Genting Highlands, via the Genting Integrated Tourism Plan, known as GITP. The multi-phase plan is described by Genting Malaysia as a 10-year, MYR10-billion blueprint that was launched in December 2013.
The first of the new facilities – the First World Hotel Tower 3 – was fully opened in June 2015.
“Other attractions and facilities under the Genting Integrated Tourism Plan are geared towards a progressive opening before the end of 2016,” the firm noted in its Thursday press release.
A theme park called 20th Century Fox World at Resorts World Genting is likely to have a phased opening starting at the end of 2017, said a report from brokerage Maybank IB Research issued on November 1, following a visit to the site.
Genting Malaysia said its improvement in third-quarter leisure and hospitality revenue “was mainly contributed by higher hold percentage in the mid- to premium segment of the business despite registering lower business volumes.” That was a reference to the house’s hold in casino games.
Adjusted EBITDA
Genting Malaysia stated however that its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) for the Malaysian operations were lower compared to the prior-year quarter.
“This was primarily due to higher operating expenses relating to the mid- to premium segment of the business,” it said.
Genting Malaysia’s third-quarter total revenue grew by 8.5 percent year-on-year, to nearly MYR2.20 billion. Adjusted EBITDA for the leisure and hospitality business was MYR563.60 million, 28.4 percent higher than the same quarter last year.
It said that during the quarter, the firm’s overall adjusted EBITDA was negatively affected by a lower foreign exchange translation gain on its U.S.-dollar- and British-pound-denominated assets.
The group’s trade receivables and other receivables amounted to MYR640.40 million as of September 30. On December 31, 2015, such receivables were MYR1.24 billion.
The firm’s dividend for the nine months to September 30 was MYR242.28 million, consisting of a final single-tier dividend for the year ended December 31, 2015. It was paid on July 26, 2016, at MYR0.043 per ordinary share of MYR0.10, the firm said in its Thursday filing to Bursa Malaysia.
U.S. business
In the U.S. and the Bahamas, Genting Malaysia reported higher revenue and higher adjusted EBITDA mainly driven by higher volumes of business from, respectively, Resorts World Casino New York City and Resorts World Bimini.
It said reduced operating costs from the Bimini operation – following the cessation of the Bimini SuperFast ferry service between Miami in the U.S. state of Florida and the Bahamas – had contributed to the improvement in adjusted EBITDA.
Genting Malaysia’s U.K. operations recorded “strong growth in revenue and adjusted EBITDA,” it said.
“This was mainly contributed by its premium players business which recorded a better hold percentage. There was also higher debt recovery during the quarter,” the firm added.
“In spite of the improved operational performance, revenue and adjusted EBITDA [in U.K. operations] were dampened by the unfavourable foreign exchange movement of the British pound against the Malaysian ringgit,” noted Genting Malaysia.
Nomura noted regarding Genting Malaysia’s parent Genting Bhd: “Tenders for the construction work at Resorts World Las Vegas are due to be rolled out in a few months, and the total investment for phase one has been guided at MYR11 billion (approximately US$2.8 billion) to be spent over 2.5 to three years. The investment of USD2.8 billion excludes approximately US$350 million for the land acquisition and US$100 million spent already on architects, consultants and a site office.”
The brokerage’s analysts added: “The company plans to fund 40 percent of the total investment of MYR11 billion from internal cash, and the remaining 60 percent will be raised in the bond market at Genting Bhd level.”
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