Genting Malaysia Chairman Tan Sri Lim Kok Thay has said he will take a 20 percent pay cut to mitigate the impact of the tax increases imposed in last year’s budget.
Last year Tan Sri was paid MYR93.5 million and the reduction will save the company MYR18.7 million, according to Maybank analyst Samuel Yin Shao Yang. The savings would be MYR12.4 million if he takes that cut to his cash earnings, without bonuses.
“Either way, the cost savings to GENM will be less than 1 percent of our FY19E core net profit estimate,” he said in a note. “As much as Tan Sri’s move sits well with the investment community, it is unlikely to move the hypothetical needle,” he adds.
Finance Minister Lim Guan Eng said in his budget last year that annual fees for casino licenses will be increased to 150 million ringgit ($36 million) from 120 million ringgit. Duties on casino gross income will rise to 35 percent from 25 percent previously.
The tax hikes, which were double the level analysts had been expecting, triggered a series of rating downgrades for Genting Malaysia.
Fitch Ratings estimated Genting is likely to see a decline of around 8 percent to 9 percent in group earnings before interest, tax, depreciation, amortization and rent/restructuring costs (EBITDAR) as a result of the tax hikes, though potential cost savings may offset the impact on the group’s financial profile.