GenM remains cautious of near-term prospects of industry

The group told shareholders it is positive on the long-term outlook.

PETALING JAYA: Genting Malaysia Bhd (GenM), which reported its first annual profit since the Covid-19 pandemic, remains cautious of the near-term prospects of the leisure and hospitality industry.

In a filing with Bursa Malaysia, the group told shareholders it is positive on the long-term outlook as it seeks to attract more visitors and increase customer spend at Resorts World Genting (RWG), its integrated resort in Malaysia.

GenM staged a turnaround in the financial year of 2023 (FY23) with a net profit of RM436.79mil, although this was less than one-third of the RM1.4bil net profit it made in FY19 prior to Covid-19.

Stepping further into 2024, the group noted the expected growth in the Malaysian regional tourism and domestic private consumption augurs well for its business.

Though competitive pressures remain, it intends to focus on innovative marketing initiatives to expand customer reach while capitalising on value offerings to grow key business segments.

“In the United Kingdom, the group is encouraged by the sustained positive performance of its casinos despite the challenging operating environment.

“The group will also keep managing its costs effectively to improve its operational leverage and boost profitability.

“In the United States, the group remains focused on reinforcing its market position and expanding its presence in New York State to compete effectively in the northeast US region.

“The group will continue to actively grow its customer database, while enhancing synergies between Resorts World New York City and Empire’s assets to improve the overall returns of the group’s United States business.

“The group is also closely monitoring developments surrounding the New York Gaming Facility Board’s request for application to solicit proposals for up to three commercial casinos in New York State,” it said.

GenM yesterday reported a net profit of RM239.64mil for the fourth quarter ended Dec 31, 2023 (4Q23) as compared to a net loss of RM393.97mil a year earlier.

Revenue rose by 11.78% year-on-year (y-o-y) to RM2.72bil.

GenM said its leisure and hospitality business in Malaysia recorded higher revenue by 13% to RM1.8bil in the quarter.

The improvement was mainly attributable to overall higher volume of business from RWG’s gaming and non-gaming segments, despite the group incurring higher operating expenses due to the ramp up of its operations.

“In the UK and Egypt, the group’s revenue grew by 28% to RM429.7mil, mainly driven by higher volume of business across the group’s estate.

“In the US and the Bahamas, group revenue increased marginally by 1% to RM465.7mil.

“During the period, the group reported higher contributions from RWNYC and Resorts World Bimini (RW Bimini), which registered an improved operating performance mainly driven by higher number of cruise calls and visitation to the resort,” it said.

Following the profits recorded in 4Q23, the earnings per share (EPS) improved to 4.23 sen. GenM declared a dividend of nine sen per share for the quarter.

Cumulatively, in FY23, GenM recorded a net profit of RM436.79mil as compared to a net loss of RM519.97mil a year earlier.

Revenue for the full year rose by 18.44% y-o-y to RM10.19bil on the back of a stronger turnover from the leisure and hospitality business in Malaysia.

This was mainly due to higher volume of business from the gaming and non-gaming segments at RWG following the relaxation of border control as compared to FY22, when several key markets had not reopened.

The group’s stronger results were also achieved due to overall higher volume of business recorded at RWNYC and the improved operating performance of RW Bimini; as well as higher volume of business in the UK and Egypt.

GenM’s parent company, Genting Bhd also returned to the black in 4Q23 with a net profit of RM150.1mil, while 4Q23 revenue rose by 14.23% y-o-y to RM6.36bil.

The increase in revenue was contributed mainly by the leisure and hospitality division.

With the improved profitability, Genting’s EPS stood at 3.9 sen. A dividend of nine sen was declared for the quarter under review.

For the full financial year, Genting also staged a turnaround with a net profit of RM929.2mil. In FY22, it posted a net loss of RM299.91mil.

Its FY23 revenue increased by 21.15% y-o-y to RM27.12bil, driven by the leisure and hospitality division.

Genting said the revenue from the plantation division for FY23 were lower mainly due to weaker palm products prices which outweighed the improvement in the fresh fruit bunches production mainly driven by the Indonesian estates.

Revenue of its power division improved mainly due to higher generation from the Banten Plant in Indonesia following a shorter outage period by 31 days.

The oil and gas division recorded lower revenue due to lower global crude oil prices in FY23.

Looking ahead, Genting expects a better harvest for its plantation business in 2024, spurred by additional harvesting areas and progression of existing mature areas into higher yielding brackets in Indonesia.

However, the production growth may be moderated by ongoing replanting activities in Malaysia

The property segment will continue to offer products catering to a broader market segment in its Batu Pahat and Kulai-based projects, which have been well received.

“The downstream manufacturing segment is anticipated to face stiffer competition from its Indonesian counterparts, which enjoy competitive pricing for feedstock due to price differential arising from the imposition of export levy.

“With the completion of its major outage in February 2024, the group’s supercritical coal-fired Banten power plant in Indonesia is expected to operate with high plant load factor and availability as per the grid load requirements by the offtaker, PT PLN.

“Meanwhile, a positive outlook is expected from our 49% owned joint venture, SDIC Genting Meizhou Wan Electric Power Co Ltd in anticipation of stable domestic and global coal prices being supported by balanced supply and demand,” Genting stated in its filing.


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