CEO Morning Brief

Genting's Leisure, Hospitality Businesses Drive 3Q Earnings to Jump Over Four Times

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Publish date: Fri, 24 Nov 2023, 08:45 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (Nov 23): Genting Bhd saw its net profit jump by over four-fold to RM520.52 million for the third quarter ended Sept 30, 2023 (3QFY2023), from RM128.02 million a year ago, as the recovery at its leisure and hospitality businesses gained further momentum.

The higher quarterly earnings were also driven by lower impairment losses, lower net finance cost, higher share of profit in joint ventures and associates, the group’s stock exchange filing on Thursday showed.

Earnings per share rose to 13.52 sen from 3.32 sen.

For the cumulative nine-month period, Genting recorded a net profit of RM779.10 million versus a net loss of RM131.19 million in the previous corresponding period, as revenue grew 24% to RM19.85 billion from RM16.02 billion.

Going forward, Genting said the positive outlook for international tourism is expected to be sustained, although macroeconomic concerns could continue being a critical factor in the effective recovery of the travel and tourism sectors.

“Meanwhile, the regional gaming market is expected to continue recovering as airline capacity and air connectivity in the region improves,” it said.

The group’s 49.33%-owned Genting Malaysia Bhd — which operates a hilltop resort in the country, besides having operations in the US, UK and Egypt — remains cautious of the near-term outlook of the leisure and hospitality industry but is positive in the longer term.

In Las Vegas, Genting said Resorts World Las Vegas (RWLV) intends to continue building on its strong momentum by leveraging the Hilton branding partnership with over 166 million Hilton Honors members and capitalising on the return of the convention business and the property’s proximity to the newly expanded Las Vegas Convention Center (LVCC).

“As international travel continues to resume and with strong demand for domestic travel to Las Vegas, RWLV remains focused on growth opportunities, including ongoing efforts to build RWLV’s database for casino and resort marketing,” it said.

For its plantation business, Genting anticipates palm oil price to be under pressure in view of the steadily rising inventory in Malaysia and key importing countries.

“In addition, palm oil had to contend with larger supply of competitor vegetable oils in view of the recovery in production of soybean in Argentina and sunflower in the Black Sea region,” it said.

“However, in the longer term, palm oil price would remain supported by weaker production prospects owing to slowdown of new planting, deferral of replanting and uncertainties of weather conditions,” it added.

On its energy division, Genting said performance of its supercritical coal-fired Banten power plant in Indonesia is expected to be robust with high plant load factor and availability, coupled with improved efficiency.

Genting said the plant remains a high dispatch priority among all the thermal power plants in Jawa Island.

Meanwhile, Genting’s 49%-owned joint venture, SDIC Genting Meizhou Wan Electric Power Company Ltd, is expected to deliver a stronger performance arising from less volatile global and domestic coal prices, backed by adequate coal inventories as well as higher demand for electricity.

“However, the performance of Jangi Wind Farm in Gujarat is expected to be significantly affected by the downtime taken for the repairs of the wind turbine generators’ damaged blades caused by Biparjoy cyclone,” it said.

As for its oil and gas businesses, Genting maintains a positive outlook on its 49% working interest in the contract for petroleum exploration, development and production in the Chengdaoxi Block in the shallow waters of Bohai Bay, China, arising from anticipated stable production and the favourable outlook for global crude oil prices.

“This is also driven by tightening global supply and demand which is forecasted to improve,” it said.

Shares of Genting closed unchanged at RM4.36, giving the group a market capitalisation of RM16.9 billion.

Read also:
GenM's 3Q earnings jump 15-fold on post-pandemic recovery momentum, lower impairment

Source: TheEdge - 24 Nov 2023

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