Genting Singapore’s (formerly Genting International Public Ltd) revenue surged to S$979.3mil in the three months to June 30, compared with S$120.1mil previously boosted by improved earnings from its new RM4.7bil integrated casino resort, Resorts World Sentosa.
A local analyst said Genting Singapore’s good performance was expected to have a “meaningful” impact on Genting’s bottomline, seeing that the gaming company had a major and sizeable stake in it.
“There were some doubts by investors when Genting invested in Genting Singapore but the venture is showing to be fruitful,” he said.
The analyst, who had an “outperfrom’ call on the stock, said Genting’s second-quarter results ending June 30 (expected to be out by Aug 25) should be “interesting.”
He said Genting had been diversifying its earnings beyond the local shore for some years and was on the lookout to acquire and/or operate casino-related businesses abroad as a business growth strategy. “This (purchase of a major stake in Genting Singapore) looks very promising, despite earlier apprehension,” he said.
Another local analyst said positive earnings from Genting Singapore were a big plus to bolster Genting’s overall financial results as the gaming business represented a significant portion of its revenue stream. “To put things in perspective, Genting’s gaming business represents over 70% of its earnings stream,” he added.
Genting’s other businesses include plantation, biotechnology, property, energy and leisure and hospitality.
A foreign analyst said the recent proposal by Genting’s unit, Genting Malaysia Bhd, to acquire Genting Singapore’s affiliate UK casino businesses for £340mil (RM1.7bil) had drawn some concern, especially among investors.
“The deal is expected to be completed at month-end but some quarters are apprehensive about it,” he said, adding that time would tell how the deal would play out.
He said in view of the gaming operating business and environment in the UK remaining very challenging, especially in recent years, Genting’s foray (vis-a-vis Genting Malaysia) to own and operate 46 casinos in the UK might take some time to turn around.
“This (turnaround) is shareholders’ main concern,” he said, adding that the gambling environment was different in Asia.
Genting and related parties collectively have a 49% stake in Genting Malaysia.
The foreign analyst said Genting believed there were growth opportunities in having a major stake (via its unit) in the largest casino operator in Britain and saw good synergistic opportunities to build upon with its existing gaming business.
In addition, he said, Genting Malaysia’s subsidiary, Genting New York LLC (Genting NY), had recently won the bid to develop and operate a video lottery facility at the Aqueduct Racetrack in New York with a proposal that included RM1.2bil (US$380mil) as an upfront licensing fee.
“Seeing that Genting has a substantial interest in these companies’ performance as a result of its units having sizeable stakes in these companies, be they US, Britain or Singapore-based, it’s also fair that shareholders are concerned with Genting management’s global investment strategy,” he said.
The foreign analyst, however, concurred with local analysts that the Singapore casino investment appeared favourable.
For the first quarter ended March 31, Genting posted RM232.4mil net proft on revenue of RM2.1bil.
By DANNY YAP
danny@thestar.com.my
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