Genting: Low Contribution From Local Malaysian Market A Worry?

 

For those who track the financial performance of leisure and hospitality measure, Genting, there sure are warnings signs. In the past year, the company has seen a drop in its sequential revenue and profit numbers, mainly due to lower volume in the premium user segment in both its Malaysian and Singapore outlets.

So is this a sign of a trend that is setting in and should casino bulls start getting worried? Surprisingly the company though cautious in its stance does not appear too worried or unnecessarily ruffled. The company’s spokesperson, its Chairman, speaking at a recent AGM or annual general meeting opined that while there are worry clouds overwhelming the near-term outlook, the long-term appears sunny and bright.

Ringitt On The Radar

The ringitt’s recent depreciation has been a cause of major concern. It is seen as a single most important catalyst to drive up payouts. All of Genting’s dollar denominated borrowings will see major outflow as a result. However, the company maintains that it has a silver lining too. The weak ringitt is seen as propelling tourism to Malaysia and as a result providing a boost to the sagging leisure and hospitality sector in the region.

The company’s chairman sounded positive in terms of kindling the growth guns with the help of weak local currency and projected boost in tourism as a result. However for guaranteeing growth over the longer term, it seems there is more armory that is being added to its repertoire.

Inorganic Growth Engine

In an effort to tide over waning profits in the home market and balancing dollar-denominated borrowing the company is also actively scouting the M&A route for potential buyouts that can put its growth prospects back to top gear.

Despite its failed second bid in New York, Genting Chairman has clarified in no uncertain terms that the casino major will continue to scout for potential target buys anywhere in the world as and when the opportunity presents itself. Though nothing’s finalized yet, Genting’s search for a suitable partner continues as it battles a hugely devalued currency on the home front.

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