Genting ventures earnings accretive starting 2026


Genting president Datuk Seri Tan Kong Han said the potential returns on investments on these new projects are forecast to be in the double-digits

PETALING JAYA: Genting Bhd’s power plant project in China and floating liquified natural gas (FLNG) venture in Indonesia will be earnings accretive from 2026 onwards and the business expansion for its energy division will yield good returns over mid to long-term horizon.

Based on Genting’s 49% stake, revenue accretion could be around RM800mil per year from 2026 onwards or 2.4% of UOB Kay Hian Research’s forecasts.

The research firm said based on Genting’s 2023 power division’s earnings before interest depreciation (Ebitda) margin of 37%, Ebitda accretion from 2026 may be RM295mil (3% of UOB Kay Hian’s Ebitda forecasts).

In terms of balance sheet impact, the acquisition and investment of 428 million yuan will be fully funded by Genting’s internally generated funds, thus no changes to gearing levels.

Genting signed two deals recently. There are memoranda of understanding between Genting subsidiary PT Layar Nusantara (PTLNG) and China’s Wison Energies to design and construct a nearshore 1.2 million-tonne-per annum (mpta) FLNG facility in Indonesia; and Genting’s subsidiary Genting MZW to acquire 49% stake in SDIC Jineng (ZhouShan) Gas Pow.

Genting’s 95%-owned indirect subsidiary PTLNG is giving a 27-month period US$1bil contract to China’s Wison New Energies for engineering, procurement, construction, installation and commissioning work.

The contract is for a 1.2 mpta FLNG facility in Indonesia.

“We understand that this is the first FLNG project in Indonesia and will be operated by Genting’s PTLNG, while the feed gas will be supplied by its another subisidiary, Genting Oil Kasuri.

“This FLNG facility will be commencing operation with the first drop of LNG in the third quarter of 2026,” the research house said.

Genting’s Oil Kasuri operates the Asap-Kido Merah gas field’s concession in Indonesia’s West Papua province that was secured back in 2008.

“We deem that Genting’s Oil Kasuri will supply the feed natural gas to this FLNG project operated by PTLNG, where natural gas can be extracted from the reservoir and converted into 1.2 mpta LNG for exports.

“Assuming pre-pandemic’s five-year average LNG price of US$9 and Genting’s FLNG is able to operate at its capacity of 1.2 mpta, potential revenue accretion for Genting is as high as RM2.64bil annually (8% of our 2026-2027 revenue forecasts),” UOB Kay Hian said.

It added that while Genting’s net gearing will be raised to 0.33 times from its current gearing ratio of 0.27 times (based on current net debt of RM15.5bil), this net gearing level is still healthy and is reasonable for the group to anchor better mid to long-term growth.

Meanwhile, Genting said the SDIC Jineng project is expected to contribute up to US$346mil (RM1.63bil) yearly in revenue for 25 years.

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Genting , energy , FLNG

   

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