Malaysia’s only casino operator is getting set to roll out new attractions in a major revamp of its flagship property in the Genting Highlands, however, the group’s chairman is warning that it won’t include more room on the casino floor.
Genting Malaysia’s RM10 billion ($2.4 billion) expansion of its highlands resort, known as the Genting Integrated Tourism Plan (GITP), is seen as the biggest driver for potential growth at the Malaysian operator.
The ten-year plan was first announced in 2013 and foresaw a budget of RM5 billion. That was subsequently doubled, mainly to account for more spending on theme park attractions.
The group had remained tight lipped about the casino component of the expansion, however, chairman and chief executive Tan Sri Lim Kok Thay has now said the plans don’t envisage extra space on the casino floor.
While total area for gaming will not increase, this doesn’t mean there will be no additional facilities, said Lim. “We will see. If you can fit more tables into the same space, why not?”
“We would start to ‘soft open’ part of it at the end of this year, and progressively roll everything out next year.
No online gambling
Malaysian authorities have noted they have no plans to legalize online gambling, saying that the people have enough options if they want to gamble. InspectorGeneral of Police, Tan Sri Khalid Abu Bakar said: “I think we have enough means for the people to gamble; we have Magnum, Toto and so on.” Khalid said Malaysian police had proposed some amendments to the Common Gaming Houses Act 1953, but these were not related to online gambling.
Genting sells Genting HK stake
Genting Malaysia said it has sold its 16.87 percent stake in its sister company Genting Hong Kong for about $415 million. The sale price for the 1,431,059,180 shares was $0.29 a share, which represents an 8.2 percent premium to the five-day weighted average trading price. Genting sold the stock to Golden Hope Ltd, a discretionary trust in which Tan Sri Lim Kok Thay and other family members of the founder of the Genting Group are beneficiaries. Golden Hope owned 47.22 percent of Genting Hong Kong as of the end of September.
The company is forecast to open its Sky Avenue & Sky Plaza shopping malls, and a new cable car station progressively by end 2016. However, its much touted Twentieth Century Fox World theme park has been delayed to late 2017. Phase 2 will see the construction of more luxury hotels as well as a show arena seating up to 10,000.
According to Alliance DBS research, the opening of new facilities is likely to drive further visitation. The number of visitors is likely to improve from 19 million in 2015 to 25 million by 2018, on track to meet its target of 30 million by 2020. The higher visitation, coupled with the potential availability of 300 new gaming tables, are expected to drive its earnings, it said in a recent report.
The weak Malaysian ringgit is also expected to attract more tourists, making the country cheaper in relation to some of its regional neighbours. However, DBS points out that the majority of visitors to the resort is likely to continue to be Malaysian.
“We understand that Malaysians continue to dominate visitation to Genting Highland, of which day trippers constitute about 70 percent of total visitation. On the other hand, Chinese tourists only made up about 3 percent of total visitations to Genting Highland,” it said in a recent report.
In Q2, the group reported total revenue increased by 13 percent to RM2.23 billion, while adjusted earnings before interest, taxation, depreciation and amortization and profit before tax grew by 52 percent to RM662.2 million and 89 percent to RM512.1 million respectively from 2Q15. Net profit more than doubled to RM465.3 million during the quarter.
However, domestic growth was sluggish, with revenue rising just 4 percent. Revenue from the group’s U.K. operations was up 71 percent, with revenue from the U.S. up 13 percent.
The company has been on an aggressive overseas expansion push in recent years, in particular in North America.
Since entering the US market in 2011 with the launch of Resorts World New York City, Genting Group has made a number of major investments in the country.
These investments have included the $236 million purchase of real-estate in Miami in 2011, a near $250 million investment as part of an agreement to run a proposed $1 billion tribal development in Taunton, Massachusetts, and, most eye-catchingly, plans for the estimated $4 billion Resorts World Las Vegas, which will be the first major new development on the Strip for almost a decade when it opens in 2019.
Genting has explored a second license in New York, missing out on a proposed Orange County development in 2014. However, earlier this year it was granted a license to operate a further 1,000 video lottery devices on site and is planning for a Phase Two expansion.