GEN Malaysia posts 3Q profit, EBITDA down

Nov 29, 2019 Newsdesk Latest News, Rest of Asia, Top of the deck  

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International casino operator Genting Malaysia Bhd posted a profit in the third quarter 2019, on adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) that actually fell 14.8 percent year-on-year.

Its profit for the three months to September 30 was MYR410.8 million (US$98.5 million), compared to a loss of MYR1.49 billion in the prior-year period.

Group adjusted EBITDA nonetheless slipped to MYR694.4 million, compared to MYR814.8 million in third-quarter 2018, the firm told Bursa Malaysia on Thursday.

The return to profit compared to the previous-year period was “primarily due” to the absence on this quarter’s balance sheet of an impairment loss amounting to MYR1.83 billion linked to the group’s investment in promissory notes issued by the Mashpee Wampanoag Tribe in the United States, in relation to a stalled tribal casino project there. The information was included in a press release accompanying the results.

Genting Malaysia has a monopoly casino licence in Malaysia, and also runs casino operations in the United States and the Bahamas; and the United Kingdom and Egypt.

The group’s third-quarter revenue rose 1.1 percent, to just under MYR2.63 billion, compared to just under MYR2.60 billion a year earlier.

Genting Malaysia records its gaming business performance within a heading called “leisure and hospitality” in its respective geographical sectors of operation.

It said in a press release its Malaysia leisure and hospitality operations at the Resorts World Genting casino complex (pictured) outside that country’s capital Kuala Lumpur – its main earnings generator – recorded a 5.4 percent increase in revenue to just under MYR1.80 billion, “primarily aided by higher hold percentage in the mid- to premium-players segment”.

A Friday note from Samuel Yin Shao Yang, analyst at Maybank IB Research, said third-quarter and first-nine-month performance of Genting Malaysia had “outperformed” the institution’s expectations “largely due to higher-than-expected VIP win rate.”

The group’s non-gaming business at Resorts World Genting grew by 36 percent, “as the introduction of more attractions” at the complex “continues to be well received,” said Genting Malaysia’s press release.

Nevertheless, adjusted EBITDA at the Malaysia operation decreased by 16.2 percent year-on-year to MYR537.5 million, “mainly due to higher casino duties”.

Resorts World Genting also registered a fall in overall volume of business in the gaming segment “primarily due to lower incentives offered to customers,” said the firm.

In the reporting period, the group also recorded a reversal of provision of MYR101.4 million “following the settlement of the litigation associated with the outdoor theme park” at the site.

Tushar Mohata and Alpa Aggarwal of brokerage Nomura said in a Friday note that the outdoor theme park opening date remained scheduled for the third quarter 2020.

Referring to an expected acquisition of a 49 percent stake in U.S.-based casino operator Empire Resorts Inc by Genting Malaysia and other interests controlled by the Genting conglomerate’s founding family the Lims, the Nomura team said that “losses from Empire will affect [Genting Malaysia's] financial-year 2020,” but the theme park opening at Resorts World Genting in Malaysia “should lead to a solid financial year 2021.”

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