Founded in 1965 and listed in 1989, Genting Malaysia Berhad operates in the gaming, leisure, and hospitality business. It owns and operates a portfolio of integrated resorts including Resorts World Genting in Malaysia and Resorts World New York City, Resorts World Catskills, and Resorts World Hudson Valley in the U.S., Resorts World Bimini in The Bahamas, and more than 30 casinos across the UK and Egypt.
Here are 10 things I learned from the 2024 Genting Malaysia AGM.
1. Revenue increased 18.4% year-on-year to RM10.2 billion in 2023 because of continued growth in business volume across the group’s operations worldwide. Regional tourism continued its recovery, with 2023 revenue reaching 97.9% of the pre-pandemic levels seen in 2019.The company recorded a net profit attributable to shareholders of RM0.4 billion in 2023 compared to a net loss of RM0.5 billion in 2022 mainly due to higher revenue and effective cost management as well as higher tax incentives claimed. Dividend per share was maintained at 15.0 sen.
2. The company had a net debt position of RM8.3 billion in 2023. Due to the depreciation of the Malaysian ringgit against the U.S. dollar, interest expenses increased from RM596.7 million in 2022 to RM635.3 million in 2023 as some of its debt is denominated in U.S. dollars.
3. The group’s operations in Malaysia contributed to close to two-thirds of its revenue. The number of visitors to Resorts World Genting increased from 22.2 million in 2022 to 24.9 million in 2023, putting it on track to recover to its pre-pandemic level of 28.7 million in 2019. In 2023, 72% of the visitors to Resorts World Genting were day-trippers. Occupancy rates improved from 95% in 2022 to 97% in 2023, with the entire room inventory available for sale. The hilltop integrated resort also hosted more shows, events, and concerts throughout the year.
4. U.S. operations benefited from a full-year contribution of Resorts World Hudson Valley, which opened in December 2022. However, higher payroll costs and operating expenses were incurred in 2023 due to labour union contracts renewal.
Resorts World New York City remains the leading video gaming machine facility in New York State, holding a dominant 40% market share compared to its closest competitor at 25%. Only online sports betting is currently legal in the state, and Genting Malaysia offers this service through Resorts World Bet.
Importantly, Genting Malaysia is pursuing a full commercial casino license bid, which could significantly expand its offerings in downstate New York. Up to three full commercial casino licenses may be issued, and the company has an added advantage as the licenses tend to be awarded to land-based casino operators.
5. The company will invest another US$100 million of internal cash in its 49%-owned associate, Empire Resorts, Inc. This will help Empire reduce its loans and interest expenses, as well as provide additional working capital. In return, the company will receive convertible preferred stock in Empire, potentially increasing their ownership stake to 76.3% by 2030. The management explained that the capital injection allows Empire to maintain its financial structure and retain its unused tax credits. Empire has about 30% of the market share in Northeastern New York with Resorts World Catskills and Hudson Valley.
6. Genting Malaysia will continue to look for a buyer for the Miami Herald Land as the previous buyer did not proceed with the acquisition. It also expressed interest in setting up its gaming presence in Thailand if business terms and conditions are viable.
7. The company’s efforts to turn around its Bahamian business are proving successful. Resorts World Bimini’s occupancy rate rose from 31% in 2022 to 38% in 2023. This growth is likely due in part to their investment in a new cruise jetty, which has facilitated a significant increase in cruise traffic. The number of cruise calls increased by 28.6%, from 189 in 2022 to 243 in 2023, while the number of visitors almost doubled year-on-year to over 631,000 in 2023. By continuing to collaborate with international cruise operators, Resorts World Bimini is well-positioned to attract even more visitors and turn profitable in 2024.
8. The company’s business in the UK and Egypt remained resilient and profitable despite higher payroll costs. The gaming industry in the UK may potentially consolidate as increasing competition forces the closure of unprofitable businesses. Genting Malaysia’s market share grew from 24% in 2022 to 26% in 2023. Some business tailwinds include the proposed change in the legislation to increase the number of slot machines per facility from the existing 20 to 80.
9. In Q1 2024, revenue increased by 21.1% to RM2.8 billion, benefiting from increased business volumes at Resorts World Genting. The company registered a quarterly net profit attributable to shareholders of RM57.8 million, compared to a net loss of RM27.4 million in the corresponding quarter of the previous year. Resorts World Genting experienced an influx of foreign tourists, particularly from Singapore, Indonesia, China, and India, following the implementation of a visa-free policy for China and India in December 2023.
10. After photos of the construction of a toll gantry at Gohtong Jaya surfaced online and sparked concerns among netizens, the Bentong Municipal Council halted construction work due to the lack of planning permission from the authorities. The management explained that the road, where the toll station was proposed, is built, owned, operated, and managed by the company’s subsidiary for the past 59 years. The future of the toll project remains uncertain.
The fifth perspective
Despite the challenging high-cost environment, the ongoing recovery in travel and tourism spending from the company’s key markets is a positive sign for its future. Malaysia’s improving economy, driven by strong external demand and domestic expenditure, further strengthens this outlook. As a result, the company’s short-term prospects appear bright.
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