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Author: Tan KW   |   Latest post: Wed, 23 Oct 2019, 9:42 PM


10 things I learned from the 2019 Genting AGM - Shak Chee Hoi

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Listed in 1971, Genting Berhad operates in nine countries across four continents. It is involved in various businesses ranging from leisure and hospitality, plantations, property, as well as power and oil and gas.

As an investment holding and management company, its businesses are conducted via its listed companies including Genting Malaysia Berhad, Genting Singapore Limited, Genting Plantations Berhad, as well as unlisted Genting Energy Limited and Resorts World Las Vegas LLC.

Here are 10 things I learned from the 2019 Genting AGM:

1. Revenue increased 4.1% year-on-year to RM20.9 billion in 2018. In the last five years,revenue has grown at a compound annual growth rate (CAGR) of 3.4%. The improved results are mainly due to the better performance achieved by the leisure and hospitality segment.

The leisure and hospitality segment contributed 83.1% of Genting’s revenue in 2018 compared to 82.9% in 2017.Resorts World Sentosa and Resorts World Genting remained the top two revenue contributors at 36.4% and 31.6% respectively.

Source: Genting Berhad AGM presentation slides

2. Genting Singapore will invest S$4.5 billion in its Resorts World Sentosa 2.0 expansion plan. The expansion will increase the resort’s space by 50% and is projected to complete within five years by 2025. Genting Singapore will also participate in integrated resort opportunities in Japanese cities. For further details on Genting Singapore, you can read our analysis of the 2019 Genting Singapore AGM.

3. At Genting Plantations, oil palm fresh fruit bunch (FFB) production growth of 10.6% to 2.1 million metric tonnes was driven mainly by Indonesian operations. Indonesia is increasingly an important contributor to FFB production as shown in the charts below primarily because of the young age profile and increasing mature area of the oil palm plantations there.

Source: Genting Berhad AGM presentation slides

Total area planted is around 159,000 hectares, of which, 63% is in Indonesia. Average age profile of planted palms is 11 years, and 48% oil palms are in their prime age and continue to yield FFB.

Source: Genting Berhad AGM presentation slides

The demand for palm oil in Malaysia will continue to grow as the government implemented the B10 biodiesel programme for the transportation sector in February 2019 and will implement the B7 programme for the industrial sector by July 2019. The number after ‘B’ indicates the percentage of palm oil content to be blended to form biodiesel.

4. Under the Genting Energy division, approximately 160,000 barrels of oil were drilled from new wells in 2018. Total production in 2019 will remain at 2018 levels at 2.8 million barrels of oil. This is because production from new wells will replace depleting production from old ones.According to chairman and CEO Tan Sri Lim Kok Thay, there are plans in the future to list the energy division or sell it to investors who want to use energy locally to save on transportation costs.

5. Construction of Resorts World Las Vegas is ongoing and targeted to be completed by the end of 2020. The first phase of the construction will cost US$4 billion. The 87-acre site is located on the Las Vegas Strip, which is a prime location concentrated with integrated resorts and key attractions. The project boasts 3,400 hotel rooms and 100,000 square feet of gaming floor. The dispute with Wynn Resorts Holdings has also been resolved after Resorts World Las Vegas agreed to make some design changes to their buildings.

6. In reply to a shareholder, the management shared that gaming licenses are renewed every three months in Malaysia and every three years in Singapore. The licence obtained for Resorts World Las Vegas in Nevada is valid ‘forever’ until it is revoked. The licence matter is more delicate in a multi-religious society like Malaysia whereas Genting has a stronger collective say in the U.S. along with other gaming players.

7. Impairment losses almost tripled from RM675.0 million year-on-year to RM2.0 billion in 2018. CFO Wong Yee Fun explained that approximately RM1.8 billion was from the promissory notes issued by the Mashpee Wampanoag Tribe in 2018, and RM200 million was impaired from investments from life science companies.

8. Genting Malaysia disposed of Maxims Casino Club in Kensington, London in March 2019. The disposal is part of its rationalisation of gaming business in the UK to continuously shift some investments into Europe to prepare for Brexit.  Impairment losses on several UK casino licences were already made in 2017 amidst the subdued business environment.

9. Wong explained to shareholders that Genting’s receivables mainly come from Resorts World Singapore where credit is given to premium players. In line with the credit policy at Resorts World Singapore, the receivables commensurate should continue to grow with increasing gaming revenue. As at 31 December 2018, trade and other receivables stood at RM2.2 billion.

10. Tan Sri Lim clarified that Genting Berhad is not in the cruise business when a shareholder requested the board to share views on the stiff competition in the cruise business. Genting Hong Kong Limited – an affiliated brand controlled by Tan Sri Lim via Golden Hope Limited — is the cruise and integrated resort operator. In October 2016, Genting Berhad and Genting Malaysia Berhad sold their combined 17% stake in Genting Hong Kong to Golden Hope Limited. Similar to what he did at Genting Malaysia, Tan Sri Lim also volunteered to reduce his salary by 20% at Genting Berhad in view of the challenging business environment.

Read more: 8 things I learned from the 2019 Genting Singapore AGM
Read more: 11 things I learned from the 2019 Genting Malaysia AGM



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