GGRAsia – Genting Malaysia 1Q profit down 25pct

Genting Malaysia 1Q profit down 25pct

May 24, 2019 Newsdesk Latest News, Rest of Asia, Top of the deck

First-quarter profit at casino operator Genting Malaysia Bhd fell 25.1 percent on higher revenue but also some expenses that nearly doubled year-on-year.

Such first-quarter profit was just under MYR268.29 million (US$64.0 million) compared to MYR358.24 million in the first quarter last year.

Revenue for the first three months this year was just under MYR2.74 billion, compared to nearly MYR2.40 billion in the same period a year earlier.

But “other expenses” rose 83 percent to MYR511.38 million, compared to MYR279.47 million in first quarter 2018.

The firm said in a press release the results had been “impacted by a provision for contract termination related costs of MYR198.3 million in relation to the outdoor theme park at Resorts World Genting.”

Maybank Investment Bank Bhd said in a Friday note that Genting Malaysia had “upside potential” should the currently-stalled outdoor theme park at Resorts World Genting open, and the “Mashpee Wampanoag investment be written back”. The former was a reference to the unresolved issue of what was to have been a Fox-branded amusement park at Resorts World Genting. The latter was a reference to a stalled tribal gaming project in the United States in which Genting Malaysia had invested some promissory notes.

Basic and diluted earnings per share for the period to March 31 were MYR0.0475 and MYR0.0474 respectively, compared to MYR0.0633 in both cases a year earlier.

No dividend was proposed or declared for the reporting quarter.

Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) for its three operational gaming sectors: Malaysia via the Resorts World Genting casino complex; the United Kingdom and Egypt; and the U.S. and the Bahamas; were respectively, MYR555.6 million; MYR41.0 million; and MYR66.0 million in the first three months. Aggregated group adjusted EBITDA was MYR662.6 million.

Genting Malaysia breaks down its results into two segments: leisure and hospitality; and property development. The first includes gaming , hotel operations, food and beverage, retailing, and theme parks and attractions.

Revenue from leisure and hospitality in the first quarter was MYR1.91 billion for Malaysia; MYR419.3 million for the U.K. and Egypt; and MYR367.0 million for the U.S. and Bahamas. The aggregate of such revenue was just under MYR2.70 billion.

Japanese brokerage Nomura wrote in a Friday note – alluding to cost cutting at Genting Malaysia – that guidance from management was that: “Malaysia VIP volumes have declined in double digits year-on-year due to lower incentives offered, and mass revenues declined 6 percent year-on-year (which implies investor fears of ‘programme’ players going elsewhere like Cambodia/Singapore due to lower promotional spending is coming true).”