GGRAsia – Genting HK 1H profit up eightfold on disposals

Genting HK 1H profit up eightfold on disposals

Aug 25, 2014 Newsdesk Latest News, Philippines, Rest of Asia, Top of the deck

Genting Hong Kong Ltd – a joint venture investor in the Resorts World Manila casino complex (pictured) in the Philippines – on Friday said its group profits for the six months to June 30 rose nearly eight-and-a-half times. That was even more than the 813 percent rise it had flagged in a profit warning to the Hong Kong Stock Exchange in July.

The firm posted a profit of US$216.7 million for the period, compared to approximately US$23.1 million in the same period in 2013, a year-on-year rise of 840 percent.

Much of the improvement was on gains from disposals. Group turnover for the first half rose by a more modest 10 percent year-on-year, to nearly US$281.6 million, from US$256.6 million in the first half of 2013.

Gaming revenue for the group – including from its casino ships under the Star Cruises brand – rose 14 percent to US$167.0 million, from nearly US$146.9 million in the prior period, which the company mainly attributed to “a stronger overall luck factor” for the house versus the players.

Genting Hong Kong’s share of profit from Travellers International Hotel Group Inc – the joint venture with Philippines-listed Alliance Global Group Inc that operates the Resorts World Manila casino resort – totalled US$27.8 million, compared with US$26.6 million in first half 2013. The slight improvement was “primarily due to the improvement in Travellers’ operating expenses on cost management initiatives,” said Genting Hong Kong.

But transactions linked to changes in the structure of the firm’s interest in Norwegian Cruise Line Holdings Ltd (NCLH) were the main reason for the improvement for the period.

The company said in its filing on Friday that the process began in January 2013, when the group’s equity stake in the cruise line firm was diluted from 50 percent to 43.4 percent as a result of an initial public offering of ordinary shares in NCLH. It resulted in a gain for Genting Hong Kong on deemed disposal of the jointly controlled entity of approximately US$81.0 million. Post-IPO, NCLH changed from being a jointly controlled entity to an associate of Genting Hong Kong.

In March 2014, the group sold 7.5 million ordinary shares of NCLH at an offering price of US$32.97 per share. As a result of the share disposal, a gain of approximately US$152.6 million to the group was recorded and the amount of ordinary shares in NCLH owned by the group decreased from approximately 31.4 percent to 27.7 percent.

Genting Hong Kong also recorded a fair value gain of US$14.4 million during the period ended June 30, which the firm said was “the excess of the fair value of certain financial assets over their carrying amounts”.

The company on Friday also reported that the second phase of Resorts World Manila – involving expansion of the existing Manila Marriott Hotel via construction of a Marriott Grand Ballroom and Marriott West Wing with an additional 227 room keys – would see the ballroom ready in the first quarter of 2015 and the new wing at the end of 2015.

The third phase of the project will involve three new hotels – the Sheraton Manila Hotel, the Hilton Manila and an extension to the existing Maxims Hotel – which will add a total of 877 room keys to the resort.

Genting Hong Kong stated in its latest filing that the third phase, due ready “prior to the end of 2017”, would also include “a new gaming area, additional retail space and six basement parking decks”.

The company additionally said its programme of fleet renewal for Star Cruises was making “good progress”. Two new ships of 150,000 gross tons each are on order with a German shipbuilder with deliveries scheduled for the fourth quarter of 2016 and of 2017 respectively. The purchase is part of its “commitment to develop the region as an international cruise destination,” added Genting Hong Kong.