GenM, Genting swing to profitability in 3Q as performances improve across board

TheEdge Thu, Nov 24, 2022 10:00pm - 3 days View Original


KUALA LUMPUR (Nov 24): Genting Malaysia Bhd (GenM) and Genting Bhd both swung back to profitability in the third quarter ended Sept 30, 2022 (3QFY2022) underpinned by strong recovery in overall business volume across the leisure and hospitality segment after the reopening of national borders and relaxation of travel restrictions.

GenM posted RM11.38 million net profit or earnings per share of 0.2 sen compared with RM289.25 million net loss or loss per share of 5.12 sen in the same period a year ago mainly on higher revenue contributions from its leisure and hospitality businesses in Malaysia, the US and the Bahamas, its bourse filing on Thursday (Nov 24) showed.

The group's revenue in 3QFY2022 was RM2.27 billion, almost three times of the level reported in 3QFY2021, led by the RM1.38 billion increase in revenue from the Malaysian leisure and hospitality business.

"The opening of Genting SkyWorlds in February 2022 also contributed to an increase in the non-gaming revenue during 3QFY2022," said GenM in the financial results statement.

The unit's operation was severely impacted by the temporary closure of Resorts World Genting between June 1 and Sept 29, 2021, coupled with imposition of travel restrictions across the country.

Higher revenues were also seen in the US and the Bahamas, by RM60.7 million or 17% year-on-year (y-o-y), largely due to higher contributions from non-gaming revenues following the opening of Hyatt Regency JFK Airport at Resorts World New York City on Aug 11, 2021, and an improved performance from Resorts World Bimini.

The higher revenues led to higher adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of RM445 million from the leisure and hospitality business in Malaysia, compared with an adjusted loss before interest, taxes, depreciation and amortisation of RM164.8 million in 3QFY2021.

The group's reported profit before tax of RM95.7 million for 3QFY2022 compared with loss before tax of RM379.2 million for 3QFY2021.

Meanwhile, Genting recorded revenue of RM6.12 billion, an increase of 75% compared with RM3.5 billion posted for the previous year's corresponding quarter, mainly from the Malaysian and Singaporean leisure and hospitality division.

The group's adjusted Ebitda for the current quarter was RM2.06 billion, a substantial increase from RM908.2 million in the previous year's corresponding quarter, said Genting in the 3QFY2022 results announcement.

"The recovery of Resorts World Sentosa continued during the current quarter. Revenue and adjusted Ebitda more than doubled over the previous year's corresponding quarter. The overall improvement in RWS' operating performance reflects the ongoing recovery of regional travel markets, but such recovery has yet to return to the pre-pandemic levels," said Genting in the results announcement.

Meanwhile, Genting posted RM128.02 million net profit or earnings per share of 3.32 sen compared with RM344.55 million net loss or loss per share of 8.95 sen for the same period a year earlier. Quarterly revenue climbed 74.79% y-o-y to RM6.12 billion from RM3.5 billion, its Thursday's Bursa Malaysia filing showed.

Additionally, revenue of Genting's plantation division increased in the current quarter mainly on the back of higher sales volume for palm products despite lower selling prices.

Genting also recognised a share of profit from the Meizhou Wan power plant in China compared with a share of loss in 3QFY2021 mainly due to higher coal costs.

For the cumulative nine months ended Sept 30, 2022 (9MFY2022), GenM's net loss reduced to RM126 million from RM1.12 billion in the same period of last year as 9MFY2022 revenue doubled to RM6.17 billion from RM2.27 billion.

Likewise, Genting's net loss narrowed to RM131.19 million from RM1.24 billion a year earlier as 9MFY2022 revenue grew 84.33% y-o-y to RM16.02 billion from RM8.69 billion.

On prospects, both GenM and Genting remain cautiously optimistic about the near-term outlook of the leisure and hospitality industry and remain positive in the longer term.

Additionally, Genting, looking ahead, observed the respective business operations of the group continue to recover from the Covid-19-related impact, with liquidity and working capital requirements continuing to be closely monitored.

Both companies also noted that global economic conditions are expected to remain challenging with a subdued outlook for major economies as concerns surrounding recessionary and inflationary pressures, tightening monetary policies and geopolitical tensions persist.

"In Malaysia, economic growth is expected to be supported by domestic demand amid the weakening external environment.

"While international tourism is anticipated to continue improving, ongoing global economic headwinds and pandemic management measures in certain countries could impact demand for international travel. Consequently, the recovery of the regional gaming market could face some setbacks," added GenM and Genting.

On Thursday, GenM's share price ended 20 sen or 7.94 sen higher at RM2.72, valuing the group at RM16.2 billion. Genting's share price finished 27 sen or 6.41% higher at RM4.48, bringing the group a market capitalisation of RM17.4 billion.

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