This article first appeared in The Edge Financial Daily on May 30, 2017
KUALA LUMPUR: Genting Malaysia Bhd, which share price has climbed nearly 43% year to date, announced that its net profit for the first quarter ended March 31, 2017 (1QFY17) more than doubled to RM323.5 million from RM161.6 million in the previous corresponding quarter.
The casino operator’s earnings per share ballooned to 5.72 sen from 2.86 sen last year.
The jump in profitability was aided by a sharp decline in foreign exchange translation losses on its US dollar-denominated assets of RM9.4 million in the quarter under review compared with RM138.8 million a year ago, said Genting Malaysia in a statement yesterday.
It also recorded higher interest income by RM31.8 million from the group’s foreign currency-denominated investments. However, the amount was offset by higher depreciation and amortisation by RM60.2 million from its Malaysian operations due to the commencement of operations of certain facilities under the Genting Integrated Tourism Plan (GITP) in the fourth quarter of 2016 and the accelerated depreciation after the closure of its indoor theme park.
Revenue for 1QFY17 grew marginally 0.43% to RM2.22 billion from RM2.21 billion a year ago, according to the statement.
The group said while GITP works are still ongoing at Resorts World Genting (RWG), it recorded 4.9 million visitors in the quarter under review and the occupancy rate at RWG’s hotels was 90%.
Revenue for its US and Bahamas operations climbed due to more contributions from Resorts World Casino New York City (RWNYC) on an improved commission structure with the city’s authority on its gaming operations.
However, Genting Malaysia’s UK operations saw lower revenue and adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) because of a reduced hold percentage from its premium players’ business although higher business volumes were recorded.
“The group’s revenue and adjusted Ebitda were also impacted by the unfavourable foreign exchange movement of the British pound against the ringgit. The decrease in adjusted Ebitda was mitigated by higher bad debt recoveries in 1QFY17,” it added.
Moving forward, Genting Malaysia remains cautious about the near-term outlook of the leisure and hospitality industry, but is optimistic about the growth potential of the industry in the long term.
In Malaysia, it would continue to focus on the development of GITP and once completed, it is expected to elevate RWG’s position as the destination of choice in the region.
In the UK, Genting Malaysia has seen the strong performance from the non-premium players’ business where it continues to grow its market share whereas in the US, it would continue to boost direct marketing to grow visitation levels and frequency of play at RWNYC.
Genting Malaysia’s share price closed at RM6.11, up nine sen, with a market capitalisation of RM34.6 billion.