This article first appeared in The Edge Malaysia Weekly, on March 13 - 19, 2017.
GENTING Malaysia Bhd’s SkyCasino will open its doors to the public “soon”, the group tells The Edge in an email response, declining to state an exact date. It was expected to open in January.
“The SkyCasino was said to open sometime in January, however the management had wanted to ensure it has all necessary components ready to give maximum impact to its customers. Nevertheless, with successful simulation exercise conducted daily on its facilities before opening, the resort’s latest casino is expected to open its doors soon.”
Genting Malaysia revealed updated figures showing that a whopping 1.19 million passengers had boarded its new 2.8km Awana Skyway cable system between its official opening on Dec 22 last year and Feb 28.
“Since the Awana Skyway began operations on Dec 22, it has transported on average 10,000 to 12,000 passengers daily. The new skyway saw a record 42,000 passengers a day during the recent Chinese New Year holiday, compared with about 30,000 passengers a day on the Genting Skyway during the same festive period last year.”
Genting Malaysia’s stock has been on an upward trend since the end of last year — around the same time Awana Skyway and Sky Avenue mall opened. The stock rose 21.6% in just over two months.
From a close of RM4.48 on Dec 23, 2016, the stock has been rising steadily to close at a historic high of RM5.45 on March 6. The share price has since softened to close at RM5.35 last Thursday.
Some 30% of analysts covering the stock polled by Bloomberg recently downgraded their calls on Genting Malaysia to “hold” or “neutral”. Those with “hold” calls say the fairly large uptick in the share price has already factored in Genting Malaysia’s near-term growth prospects and the upside potential has narrowed. Nevertheless, they are still positive on the upcoming full launch of its Genting Integrated Tourism Plan (GITP).
In its response to The Edge, Genting Malaysia says the RM10.38 billion GITP is progressing smoothly, as seen with the opening of key projects such as the Awana Skyway cable system.
“The system has 99 gondolas, 10 of which have glass floors, and travels at a top speed of 6m per second. The ascent from the Awana station at the Awana Transportation Hub to the SkyAvenue station at the resort takes only 10 minutes. Halfway through the ride, there is an option to stop at the Chin Swee Temple station. With a capacity of 10 persons per gondola, the Awana Skyway can transport up to 3,000 passengers per hour each way,” it says.
“Visitors who disembark at Level 4 of the SkyAvenue station can easily access top retail and restaurant brands from around the world at the SkyAvenue mall, which has a net lettable area of 600,000 sq ft.
“The brand-new mall has been designed for those who seek out new experiences in leisure, food and entertainment, particularly Gen Ys, millennials and young families. Currently, only Level 1, which is designated for food and beverage, and the high street fashion floor on Level 3 are open.
“The other floors will open in stages. Some of the top F&B brands brought in by Resorts World Genting are Burger & Lobsters, Café Richard and Motorino as well as Tampopo, Kyochon 1991 and Dragon-i. Fashion brands include Joy & Peace, Thomas Sabo and L’Occitane.”
Last year, Resorts World Genting had 20.2 million visitors, translating into 4% growth from 2015. About 71% of total visitor arrivals were day-trippers and 29% were hotel guests. Last year, the occupancy rate at RWG’s hotels stood at 93%.
For its financial year ended Dec 31, 2016 (FY2016), Genting Malaysia saw its revenue rise 6% year on year to RM8.93 billion. Net profit soared 125% to RM2.8 billion from RM1.24 billion in 2015.
The jump in earnings was partly due to the RM1.27 billion gain on the disposal of its Genting Hong Kong shares. Carving out the one-off gain from its investment, earnings were higher, at RM1.53 billion, compared with RM1.24 billion in 2015.
The board declared a special single-tier dividend of 7.3 sen per share and recommended a final single-tier dividend of 6.2 sen per share.
“Earnings were in line with expectations, but dividends outperformed with a special dividend per share of 7.3 sen. While we welcome the special DPS and remain bullish on GITP, we opine that the risk-reward profile for Genting Malaysia is balanced after its share price rallied 19% year to date. We leave our FY2017/FY2018 estimates largely unchanged but trim our sum-of-parts valuation by five sen to RM5.30 to account for the special DPS. We downgrade Genting Malaysia to “hold” only because upside potential has narrowed,” says Maybank Investment Research in a Feb 24 report.
A Kenanga Research report on the same day says: “While keeping FY2017 estimates, we introduce our new FY2018 forecast, with earnings expected to grow 5%. Although we remain upbeat on the GITP programme, the recent strong share price performance, which rallied 19% YTD, may have already priced in the positives. Thus, we downgrade the stock to “market perform” with an unchanged price target of RM5.66 per share. Risk to our downgrade includes stronger-than-expected earnings, especially from the GITP programme.”
Save by subscribing to us for your print and/or digital copy.
P/S: The Edge is also available on Apple's AppStore and Androids' Google Play.