GEN Malaysia 4Q profit helped by tax gain, year loss on notes

Feb 28, 2019 Newsdesk Latest News, Rest of Asia, Top of the deck, World  

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Fourth-quarter profit at casino operator Genting Malaysia Bhd rose 60.1 percent on revenue that actually fell slightly.

Such profit was MYR720.14 million (US$176.7 million) compared to MYR449.79 million in the prior-year quarter. Such group revenue was nearly MYR2.51 billion, a decline of 1.5 percent compared to the MYR2.54 billion booked in the same period in 2017.

But for the full-year ending December 31, the group recorded a loss of MYR19.6 million, compared to a profit of MYR1.16 billion in full-year 2017.

The firm said in commentary to Bursa Malaysia on Wednesday that its full-year loss was “primarily attributable to the impairment loss of MYR1.83 billion on the group’s investment in the promissory notes issued by the Mashpee Wampanoag Tribe”. That was a reference to an attempted investment in a tribal gaming venture in the United States.

Genting Malaysia – which has its main business at the Resorts World Genting casino complex in Genting Highlands near Kuala Lumpur, Malaysia’s capital, and also runs casinos in the U.S., the Bahamas, the United Kingdom and Egypt – declared a special dividend of MYR0.08 per ordinary share for financial year ending December 31, payable on April 4 this year.

A factor in the quarterly results was a MYR304.98 million positive input from taxation compared to an outgoing of MYR47.0 million in the prior-year period.

“Earnings outperformed, but due to less taxes,” said a Thursday note from Samuel Yin Shao Yang, an analyst at Maybank IB Research, part of Maybank Investment Bank Bhd.

Japanese brokerage Nomura noted regarding the fourth quarter: “Net income was higher due to tax write-backs, because Genting Malaysia switched back to the old tax computation methodology after getting judicial review approval for tax incentives.”

But Nomura analysts Tushar Mohata and Alpa Aggarwal added referring to a judicial review applied for by Genting Malaysia within the Malaysian court system: “Note, however, that the final tax incentive decision of the courts will likely only come by third quarter 2019, so the outcome remains unclear.”

Theme park

Genting Malaysia gave some commentary on the situation regarding its outdoor theme park plan for Resorts World Genting, which has been the subject of litigation in the United States after the Fox media brand decided to pull out.

Genting Malaysia stated: “The development plans and options for the outdoor theme park are being reviewed amid ongoing legal proceedings. The group remains committed to the outdoor theme park at Resorts World Genting as a growth initiative in Malaysia.”

The results lodged with Bursa Malaysia gave a breakdown of the group’s leisure and hospitality operations – which includes “gaming, hotels, food and beverage, theme parks, retail, entertainment attractions, tours and travel related services and other supporting services”.

The Malaysia operation generated fourth-quarter revenue in that segment of just under MYR1.70 billion, a 1 percent decline on a year earlier. Malaysia’s adjusted quarterly earnings for leisure and hospitality before interest, taxation, depreciation and amortisation (EBITDA) dropped 3 percent to MYR582.2 million.

The U.K. and Egypt leisure and hospitality operations booked MYR426.6 million in revenue, a fall of 14 percent on a year earlier. Adjusted EBITDA for the segment slipped 3 percent at MYR62.1 million.

The U.S. and Bahamas recorded a 12 percent decline in such revenue, to MYR343.0 million. But adjusted quarterly EBITDA in leisure and hospitality rose 141.5 percent year-on-year, to MYR92.0 million, from MYR38.1 million a year earlier.

“The group’s overall adjusted EBITDA was aided by lower foreign exchange translation losses on its U.S. dollar-denominated assets of MYR2.3 million as compared to a foreign exchange translation loss of MYR33.6 million recorded in the same period last year,” stated the firm.

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