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Genting Bhd makes big bets on non-gaming

Genting Bhd, the largest casino conglomerate in Southeast Asia, is expanding its presence in the non-gaming sector with a RM5 billion ($1.06 billion) investment plan in the energy industry.

Last Thursday, Genting’s energy division inked two deals with Chinese power and oil-and-gas firms, marking a significant expansion in its energy generation capacity and its commitment to clean energy.

One agreement involves acquiring a 49 percent stake in China’s SDIC Jineng (Zhoushan) Gas Power Generation for 100 million yuan ($13.8 million) through Genting’s indirect subsidiary, Genting MZW.

The other deal is a contract exceeding $1 billion with China’s Wison New Energies to construct a floating liquefied natural gas (FLNG) facility in Indonesia’s West Papua province.

Genting Bhd makes big bets on non-gaming
Tan Kong Han, Genting Bhd’s President and Chief Operating Officer

However, Tan Kong Han, Genting Bhd’s President and Chief Operating Officer (COO), emphasized that these investments do not signify a departure from the company’s core gaming business, which has been its mainstay for over 50 years.

According to local media outlet The Edge Malaysia, citing from the press conference, “We are not out of the gaming business,” Tan emphasized. The media brief was described as “rare.”

Meanwhile, commenting on this significant bet on the non-gaming segment, Genting’s chairman and chief executive, Lim Kok Thay, highlighted that the energy investment is part of the company’s long-term business strategy. “When it comes to the expansion or diversification of our business, away from gaming, we work very quietly and hard to prove it. So in this case, as you notice — the energy business itself has been transformed,” Lim said.

Lim Kok Thay, Genting Hong Kong
Lim Kok Thay, Genting Group boss

Lim reiterated that Genting’s core business remains firmly rooted in gaming, a sector in which the company has made its mark over the past five decades. “To still be sitting here in this room with you [the press] and to talk about the expanded footprint of that [energy] sector of the business… I think it is clear and it is very rare that we try to explain our long-term strategy [to the press],” Lim explained.

The statement aligns with revelations made during the company’s annual general meeting (AGM) earlier this month. Concerns about casino closures arose following the announcement that two out of its three casinos at Resorts World Genting (RWG) would be closed starting February 28th this year.

At that time, company’s COO Tan Kong Han assured shareholders that Genting casinos would remain operational due to positive results recorded in the past.

Genting reported an annual net profit of RM929.2 million ($197 million), marking a turnaround from three consecutive years of losses. This compares to a net loss of RM299.91 million ($63.7 million) in FY2022, driven by increased revenue from its leisure and hospitality division. Annual revenue grew by 21.15 percent to RM27.12 billion ($5.8 billion) from RM22.39 billion ($4.8 billion) the previous year.

According to the group’s financial update for 1Q24, its net profit reached RM36.7 million ($7.8 million), reversing a loss of RM45.4 million ($9.65 million) recorded in the same quarter last year.

Total gaming revenue for the group hit RM1.99 billion ($423.1 million), while non-gaming revenue totaled RM715.5 million ($152.1 million).

The company’s core gaming business benefited from an increase in inbound travelers. Since China and Malaysia entered into a visa-free agreement in December last year, Chinese tourists and the favorable exchange rate have been seen as key factors boosting its revenue.

Currently, Malaysia’s visa-free policy for Chinese passport holders has been extended twice, allowing Chinese tourists to visit until the end of 2026.

Genting Malaysia

Maybank maintains earnings estimates with positive outlook

Analyst Samuel Yin Shao Yang from Maybank notes that they will maintain Genting’s earnings estimates are ‘unchanged due to dearth of details’, but believes that the deal with Wison New Energies will allow Genting to ‘monetize its Indonesian gas fields which it has been working on since the mid-2000s’.

In the lates investment memo, the brokerage notes that ‘on balance of probabilities, we believe these 2 developments will be long-term earnings and value accretive to Genting’.

Viviana Chan
Viviana Chanhttps://agbrief.com/
Viviana Chan is an editor, interpreter, and journalist. With over a decade of experience, she writes in English, Chinese, and Portuguese. Viviana started her career in Macau-based newspapers, where she became passionate about the region's social, financial, and cultural development. Her writing focuses on the economy, emerging industries, gaming development, political affairs, and cross cultural-exchange in the business and cultural domains. She is avid for news and eager to discover and cover stories that generate public relevance.

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