Genting Malaysia posts Q2 profit

Friday 30th of August 2019

Analysts were pleasantly surprised by Genting Malaysia’s solid 19Q2 earnings but said the recent acquisition of Empire Resorts will weigh on long-term earnings.

The casino operator posted a net profit of RM416.5 million in the second quarter of 2019, up 5.3 percent year-on-year. Quarterly revenue also grew slightly to RM2.7 billion.

Genting Malaysia’s domestic operations achieved a 10 percent growth in revenue, however, Resorts World Genting reported an overall decline in the volume of business in the gaming segment, due to lower incentives offered to customers as part of cost-cutting initiatives.

Analysts from Maybank said that the company has been successful in managing the impact of the 10 ppt casino duty rate hike, and its corporate tax rate bill.

However, the analysts were concerned about the casino company’s plans to acquire Empire Resorts.

“That said, its recent acquisition of a 49 percent shareholding in Empire Resorts will weigh on long term earnings,” said the analysts.

Earlier this month, Genting Malaysia issued a statement defending its proposed acquisition of Empire Resorts saying the combination is in the best interests of both companies’ shareholders.

The company was replying to a letter from Bursa Malaysia asking for clarification of reports the U.S. operator is close to filing for Chapter 11 bankruptcy protection.

“We may revisit our call if Empire Resorts is successfully turn around financially,” the analysts added.

Looking ahead, Genting said it remains cautious of the opportunities and growth potential of the leisure and hospitality industry.

“In line with uncertain economic sentiments, the regional gaming industry is anticipated to remain challenging, particularly in the premium players segment, as evidenced by the recent performances of certain gaming operators in Singapore and Macau.