Genting investors royally rewarded


  • Business
  • Saturday, 01 Feb 2003

BY JAGDEV SINGH SIDHU

INVESTORS have had high regard for Genting Bhd from the time it was listed in 1971, and during the last 13 years there has been no let-up in sentiment. 

Loyal investors would have seen not only the company’s financial performance making huge leaps during the past decade, but also their return on investment. 

Genting has returned a three-fold increase in investment since 1990, outstripping the gains one would have received from putting money in fixed deposit. 

It has a history of rewarding shareholders handsomely. Shareholders who had kept the stock since the company’s listing and had subscribed to all their entitlements in the subsequent listing of Genting’s subsidiaries would have seen their original RM1,000 investment grow to as much as RM1.2mil in 1995 and 1997. 

“This stock is one of the best on the KLSE. It has solid businesses and more importantly, a huge cash flow,’’ said an analyst who tracks the stock. 

Genting’s fortunes are linked to its leisure and hospitality business – under subsidiary Resorts World Bhd and its cruise liner arm, Star Cruises – which today remains the biggest money earner for the group. 

Whereas Genting is synonymous with its casino, liners and hotels, the group has over the years diversified into plantations, properties, paper, and the oil and gas business, and today is one of few companies on the KLSE that can be labelled a conglomerate. 

Although Genting’s financials have fluctuated wildly since the Asian economic crisis, the group appears to have withstood the trying times. Its decision to help out Star Cruises in its acquisition of rival NCL Holdings and the subsequent cash call had led to Genting registering its first-ever net loss for its 2000 financial year. The loss was due to the group making a huge goodwill write-off. 

Its share price suffered as a result, but those that had faith in Genting’s ability had maintained a buy call throughout that period. 

That view holds true with brokerage houses today. All 23 brokers polled by Multex Global Estimates have a buy call on Genting and the company is expected to grow its earnings per share by 71% to 110 sen for its 2002 financial year, and by 15% to 126.7 sen for 2003. 

Analysts also note that Genting appears to be widening its earning base in the power sector. Its unit Sorona Ltd is looking at the possible acquisition of a stake in Australia’s Loy Yang Power. 

Even though Genting founder Tan Sri Lim Goh Tong has stepped down as chief executive – but he is still the chairman – analysts say there should be no change in the group’s direction as Lim’s son Tan Sri Lim Kok Thay, who has been appointed Genting president and chief executive officer, has been running the company for years. 

Whether Genting can deliver supernormal returns in the future is anyone’s guess but the odds are stacked in Genting’s favour, as “the house always wins’’. 

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