GENM: Short-Term Downgrade Risk vs. Long-Term Growth Potential

Based on the provided articles from The Edge Malaysia (dated December 4, 2025), here is a structured analysis and discussion of the key themes and implications for Genting Bhd and Genting Malaysia Bhd:

---

1. Core Conflict: Short-Term Downgrade Risk vs. Long-Term Growth Potential

The articles highlight a clear tension between:

• Immediate financial concerns: High debt, weak cash flow, and looming credit rating downgrade risks for both Genting and Genting Malaysia.

• Long-term optimism: Strong growth prospects from the Resorts World New York City (RWNYC) expansion, which could significantly diversify earnings and boost profits from 2026 onward.

---

2. Credit Rating Downgrade Risks

CreditSights (a Fitch Solutions company) warns that:

• Genting Bhd has breached Moody’s and Fitch downgrade triggers based on 9M2025 pro-forma numbers:

  • Retained cash flow/net debt below 20% (Moody’s trigger: 20–25%).

  • Gross leverage at 5.9x (above Moody’s 4x trigger).

  • EBITDA net leverage over 5x (above Fitch’s 3.5x threshold).

• A downgrade would push Genting to Baa3/BBB- (near junk status), which would also affect Genting Malaysia’s rating.

• Triggers: Weak cash flow, high leverage, and the US$5.5 billion RWNYC expansion largely funded by debt.

---

3. RWNYC Expansion: Opportunities & Challenges

Opportunities:

• First-mover advantage in downstate New York casino licensing.

• Expected to start live table games by mid-2026, with full ramp-up to 800 tables by 2029.

• TA Research forecasts net profit growth of 10.7% in FY2026 and 15.6% in FY2027 for Genting Malaysia.

• RWNYC’s location (Queens) offers strong local and tourist demand.

Challenges:

• Regulatory hurdles: NY Gaming Facility Location Board has yet to finalize license terms, and recommended reducing slot machines and tables.

• High capital outlay: US$5.5 billion upgrade, largely debt-funded, increasing leverage.

---

4. Privatization & Shareholding Structure

• Genting Bhd’s takeover bid for Genting Malaysia closed on Dec 1, 2025, raising its stake to 73.133%.

• CreditSights believes privatization is unlikely; the goal is to strengthen control, not delist.

• The offer price of RM2.35/share was considered unattractive by some analysts.

---

5. Market Performance & Analyst Views

• Stock performance: Both Genting and Genting Malaysia shares fell on Dec 3, 2025.

  • Genting Malaysia: RM2.19 (-2.67%), market cap RM13 billion.

  • Genting: RM3.27 (-0.61%), market cap RM12.68 billion.

• Divergent analyst ratings:

  • TA Research: "Buy" with TP of RM3.06 (bullish on RWNYC).

  • CIMB: "Hold" with TP of RM2.55 (cautious on regulatory delays).

  • HLIB: "Hold" with TP of RM2.35 (neutral).

  • CreditSights: "Market perform" on Genting, "Outperform" on Genting Malaysia.

---

6. Mitigating Factors & Potential Catalysts

• Asset sales: Genting’s potential sale of Miami land (US$1 billion) could improve liquidity and avoid breaching rating triggers in FY2026.

• Geographic diversification: Genting has non-gaming businesses and cash-rich subsidiaries (e.g., Genting Singapore).

• Earnings recovery expected in Singapore, UK, and Las Vegas operations.

---

7. Conclusion: Balancing Risk vs. Reward

Investors are currently weighing:

• Short-term risks: High leverage, weak cash flow, rating downgrade threats, regulatory uncertainty in NY.

• Long-term rewards: Potential for significant earnings growth from RWNYC, geographic diversification, and possible asset sales.

The stock’s recent decline reflects market caution despite optimistic growth projections. Success in New York is critical for Genting Malaysia’s future earnings and debt management.

---

Recommendation for Investors:

• Monitor: NY licensing progress (deadline Dec 31, 2025), Genting’s leverage ratios, and potential asset sales.

• Balance: Short-term volatility against long-term growth narrative.

• Consider: Genting Malaysia’s "outperform" rating from CreditSights if RWNYC proceeds smoothly and leverage is managed.

This situation is a classic case of high-risk, high-reward investing, with significant uncertainty around both regulation and financing in the near term.

Genting Malaysia (GENM) at a Glance

 

All eyes on Genting Malaysia’s 1Q results

All eyes on Genting Malaysia’s 1Q results
Joyce Goh
/
The Edge Malaysia

April 30, 2019 15:00 pm +08


This article first appeared in The Edge Malaysia Weekly, on April 22, 2019 - April 28, 2019.

The 400,000 sq ft Skytropolis Funland indoor theme park was opened a few months ago.
Photo By Annual Report

Source: Genting Malaysia Bhd Annual Report


Source: Bursa Malaysia


INVESTORS will be keeping a watchful eye on Genting Malaysia Bhd’s results for the first quarter ended March 31 (1QFY2019), which are due next month. They will be interested to see how well the casino operator is handling the hike in gaming taxes that came into effect in January.

The additional taxes are estimated to total at least RM650 million this year, based on the gross gaming revenue for the group’s Malaysian business last year.

Industry observers and gaming analysts say the group has only a few cards to play this year when it comes to boosting its earnings, but what it can do is to manage cost efficiently to help ease the blow.

“There is expectation that Genting Malaysia’s FY2019 earnings will fall 41% year on year due to the 10-percentage-point casino duty rate hike this year. The group has been hit on multiple fronts of late ... from the delayed outdoor theme park project to the additional gaming taxes. Given the circumstances, Genting Malaysia will have to look at what it can control in terms of financials, and that is clearly cost. It would need to be very mindful of cost,” says an analyst with a local bank.

“A cost-cutting exercise makes sense,” another analyst tells The Edge.

Genting Malaysia chairman and CEO Tan Sri Lim Kok Thay had acknowledged in his chairman’s statement for the group’s 2018 annual report that the revision of casino duties and casino licence fee will impact the group’s earnings from FY2019 onwards.

He noted that in view of the severity of the increases in casino duties, the group will continue reviewing and managing its cost structure, and this includes reducing or delaying capital expenditure as well as implementing various cost rationalisation initiatives such as “manpower optimisation”.

While he did not elaborate on what manpower optimisation means, analysts point out that the possibility of job cuts could be possible for certain high cost segments.

“It had to recruit people for the outdoor theme park and this included some high-cost hires. Now that the project is on hold due to litigation, perhaps Genting Malaysia will need to relook its cost structure for that,” says the analyst with a local bank.

Asked to comment, Genting Malaysia tells The Edge that talk about potential job cuts at the group is “speculative”.

However, a spokesperson says the group has been mindful of its headcount since 2013, when the outdoor theme park closed for the construction of the new theme park, and adopted a strategy not to replace headcount when staff leave certain positions.

Another potential manpower rationalisation strategy would be to instal more machine-enabled games and look at managing its margins when it comes to commission rates and junkets, says the analyst.

“Understandably, it can look at cutting commission rates for junkets and the rebates it gives VIPs, but this can be a double-edged sword because it could also deter VIPs and high rollers from visiting. It is important to maintain the business volume. The regional trend now is for casinos to increase their commission rates and rebates,” he says.

The analyst says another cost-cutting measure would be to increase the number of gaming tables a pit manager looks after. For example, instead of one pit manager managing three or four tables, he or she would have to manage five or six. “At the end of the day, the group will have to ensure any cost-cutting exercise it embarks on is sufficient and enough to help ease the blow from the higher gaming taxes.”

Casino duties were raised to 35% from 25% on gross gaming income — said to be the first hike in casino duties in 20 years — and gaming machine duties rose to 30% from 20% on gross collection. The last hike in casino duty, from 22% to 25%, was in 1998, when the government needed the extra revenue boost for pump-priming measures during the 1997/98 Asian financial crisis.

Duties on gross collection refer to taxes taken straight from the top line prior to deducting expenses.

Taking the FY2018 figures as a guide, a back-of-the-envelope calculation shows that gross gaming revenue is estimated at RM6.5 billion, and an additional 10% hike in casino duties on that would result in RM650 million in additional taxes.

In addition to higher duties, the Ministry of Finance increased the annual casino licence fees by RM30 million to RM150 million, and machine dealer’s licence fees to RM50,000 a year from RM10,000 a year.

Over the years, Genting Malaysia’s stra­tegy has been to diversify into hospitality to transform itself into more than a gaming group. The outdoor theme park is one of the strategies for this diversification, but its timing is unclear given the lawsuits against Fox Entertainment Group LLC and The Walt Disney Co.

Genting Malaysia is suing the two companies for alleged breach of contract related to the Fox World theme park in Genting Highlands, which was set to open this year. Disney’s acquisition of 21st Century Fox apparently raised issues because the Genting resort includes a casino, which conflicts with Disney’s stance against gambling. Fox units have filed a counterclaim against Genting Malaysia.

Nevertheless, the 400,000 sq ft Skytropolis Funland indoor theme park was recently opened as well as Imaginatrix, an attraction that combines physical rides with state-of-the-art virtual reality gaming technology.

It also recently acquired Equanimity, the super yacht formerly owned by fugitive businessman Low Taek Jho, for US$126 million, but it has yet to reveal what it intends to do with the luxury vessel.

Genting Malaysia’s share price was battered in November last year following the announcement of the increase in gaming taxes and closed at a 7½-year low of RM2.72 on Dec 14. It has since recovered 19% to close at RM3.24 last Friday. At RM3.24, the stock is still trading at a 44% discount to its 7½-year closing high of RM5.77 in August 2017.

According to Bloomberg data, 35% of ana­lysts covering the stock have a “buy” recommendation, with 45% calling a “hold” and 20%, a “sell”. The 12-month consensus target price stood at RM3.46.

At RM3.24 per share, Genting Malaysia is trading at one times book value and has an estimated forward price-earnings ratio of 15.12 times.


https://www.theedgemarkets.com/article/all-eyes-genting-malaysias-1q-results

GITP remains cornerstone for Malaysia’s gaming sector

GITP remains cornerstone for Malaysia’s gaming sector
January 16, 2018, Tuesday Sharon Kong, sharonkong@theborneopost.com


KUCHING: The Genting Integrated Tourism Plan (GITP) remains the catch in 2018 in Malaysia’s gaming sector, analysts opine in an industry insight.

The research arm of Hong Leong Investment Bank Bhd (HLIB Research) believed that in Malaysia, the multiyear growth story of GITP will continue to be the catch for Genting Malaysia Bhd (Genting Malaysia) this year, which will be driven by the recently opened VIP gaming areas in November 2017, the upcoming indoor theme park by the first half of 2018 (1H18) and the much awaited 20th Century Fox World Theme Park by end-2018.

HLIB Research noted that the target of reaching 30 million of visitation by 2020 from the current 22 million level signifies a compound annual growth rate (CAGR) of circa 10 per cent from 2016.

On another note, growing optimism is seen in Singapore as the overall market condition has improved with higher gaming volume attributable to higher patronage coupled with the return of high rollers.

The research arm believed the earnings before interest, tax, depreciation and amortisation (EBITDA) margin expansion in 2017 after the cost rationalisation initiatives will continue to bear fruit moving into 2018.

HLIB Research also highlighted that with the growing middle class in China, the appetite of outbound travel has been growing tremendously and the trend is set to continue in 2018.

“Chinese are now the largest tourist arrivals group for Singapore and third for Malaysia,” it said.

“We believe the restrictions for Chinese to travel to South Korea could be beneficial to both Genting Malaysia and Genting Singapore.”

HLIB Research expected any favourable news from Japan pertaining to the casino bill in 2H18 will create excitement for Genting Singapore.

The research arm also noted that Resorts World Las Vegas is on schedule to open in 2020 while the casino plan in Miami may be revived.

“On the contrary, casino plans in Massachusetts are stalled due to the ongoing legal issue.”

As for the number forecast operator (NFO) market, HLIB Research expected it to be stagnant or decline due to cannibalisation from illegal operators which undermine the growth potential.

The research arm pointed out that in the absence of fresh catalyst, dividend yield of circa six per cent will continue to serve as the support for share price.

It noted that the immediate risk on tax hike is unlikely given that NFOs are still experiencing lacklustre sales outlook since the introduction of goods and services tax (GST) three years ago.

“Any increase in the gaming tax or pool betting duty may cause a lose-lose situation while benefiting illegal operators instead,” the research arm said.

Overall, HLIB Research maintained ‘overweight’ on the gaming sector as the research arm believed captivation of GITP expansions will continue to drive the market with the reopening of both indoor and outdoor theme parks, supported by the overall domestic growth upcycle theme while international operations continue to show stabilised and improved performances.

“The return of VIP players seen in the regional markets is the another stimulus for the sector,” it added.


http://www.theborneopost.com/2018/01/16/gitp-remains-cornerstone-for-malaysias-gaming-sector/

GENM 24.8.2017

GENM		24.8.2017
5 Years Quarterly Report History
Qtr	Financial	Revenue	PBT	PAT	PBT
No	Quarter	(RM,000)	(RM,000)	(RM,000)	Margin
1	31-Mar-17	2,223,818	344,326	323,515	15.5%
4	31-Dec-16	2,282,941	1,796,767	1,686,334	78.7%
3	30-Sep-16	2,199,717	519,655	555,733	23.6%
2	30-Jun-16	2,234,605	512,054	476,444	22.9%
1	31-Mar-16	2,214,354	262,116	161,567	11.8%
4	31-Dec-15	2,291,879	357,846	338,558	15.6%
3	30-Sep-15	2,027,686	425,690	326,297	21.0%
2	30-Jun-15	1,983,201	271,199	230,920	13.7%
1	31-Mar-15	2,093,140	475,232	362,102	22.7%
4	31-Dec-14	2,057,968	368,426	309,839	17.9%
3	30-Sep-14	2,234,548	374,116	266,116	16.7%
2	30-Jun-14	1,910,867	318,733	254,433	16.7%
1	31-Mar-14	2,026,050	463,231	358,289	22.9%
4	31-Dec-13	2,120,123	438,050	400,515	20.7%
3	30-Sep-13	2,120,956	365,647	322,617	17.2%
2	30-Jun-13	2,224,464	569,968	460,406	25.6%
1	31-Mar-13	1,861,994	392,828	419,457	21.1%
4	31-Dec-12	1,926,506	518,971	445,690	26.9%
3	30-Sep-12	1,943,076	281,215	190,347	14.5%
2	30-Jun-12	2,119,482	638,503	495,800	30.1%
5 Years Trailing 4 Quarters
No.	Financial	ttm-Rev	ttm-PBT	ttm-PAT	ttm-PBT
Qtr.	Quarter	(RM,000)	(RM,000)	(RM,000)	Margin
1	31-Dec-17	8,941,081	3,172,802	3,042,026	35.5%
4	31-Dec-16	8,931,617	3,090,592	2,880,078	34.6%
3	31-Dec-16	8,940,555	1,651,671	1,532,302	18.5%
2	31-Dec-16	8,768,524	1,557,706	1,302,866	17.8%
1	31-Dec-16	8,517,120	1,316,851	1,057,342	15.5%
4	31-Dec-15	8,395,906	1,529,967	1,257,877	18.2%
3	31-Dec-15	8,161,995	1,540,547	1,229,158	18.9%
2	31-Dec-15	8,368,857	1,488,973	1,168,977	17.8%
1	31-Dec-15	8,296,523	1,536,507	1,192,490	18.5%
4	31-Dec-14	8,229,433	1,524,506	1,188,677	18.5%
3	31-Dec-14	8,291,588	1,594,130	1,279,353	19.2%
2	31-Dec-14	8,177,996	1,585,661	1,335,854	19.4%
1	31-Dec-14	8,491,593	1,836,896	1,541,827	21.6%
4	31-Dec-13	8,327,537	1,766,493	1,602,995	21.2%
3	31-Dec-13	8,133,920	1,847,414	1,648,170	22.7%
2	31-Dec-13	7,956,040	1,762,982	1,515,900	22.2%
1	31-Dec-13	7,851,058	1,831,517	1,551,294	23.3%
4	31-Dec-12	7,892,865	1,817,230	1,402,501	23.0%
3	31-Dec-12	8,297,604	1,751,993	1,306,092	21.1%
2	31-Dec-12	8,670,364	1,933,862	1,462,890	22.3%
5 Years Adjusted EPS, DPS, NTA and ttm-EPS for capital changes
No of shares (m)		5655.9
		adj	adj	adj	adj	adj
Qtr	Financial	EPS	DPS	NTA	ttm-EPS	ttm-DPS
No	Quarter	(Cent)	(Cent)	(RM)	(Cent)	(Cent)
1	31-Mar-17	5.72	0.0	3.48	53.79	16.50
4	31-Dec-16	29.82	13.5	3.51	50.92	16.50
3	30-Sep-16	9.83	0.0	3.30	27.09	7.30
2	30-Jun-16	8.42	3.0	3.22	23.04	7.30
1	31-Mar-16	2.86	0.0	3.18	18.69	7.11
4	31-Dec-15	5.99	4.3	3.37	22.24	7.11
3	30-Sep-15	5.77	0.0	3.38	21.73	6.32
2	30-Jun-15	4.08	2.8	3.09	20.67	6.32
1	31-Mar-15	6.40	0.0	3.05	21.08	6.52
4	31-Dec-14	5.48	3.5	2.89	21.02	6.52
3	30-Sep-14	4.71	0.0	2.76	22.62	6.92
2	30-Jun-14	4.50	3.0	2.76	23.62	6.92
1	31-Mar-14	6.33	0.0	2.78	27.26	8.22
4	31-Dec-13	7.08	3.9	2.74	28.34	8.22
3	30-Sep-13	5.70	0.0	2.57	29.14	9.32
2	30-Jun-13	8.14	4.3	2.58	26.80	9.32
1	31-Mar-13	7.42	0.0	2.48	27.43	8.82
4	31-Dec-12	7.88	5.0	2.33	24.80	8.82
3	30-Sep-12	3.37	0.0	2.22	23.09	8.61
2	30-Jun-12	8.77	3.8	2.26	25.87	8.61
Capital changes
No.	Financial	No of
Qtr.	Quarter	Shrs (m)
1	31-Mar-17	5655.9
4	31-Dec-16	5656.9
3	30-Sep-16	5659.2
2	30-Jun-16	5658.5
1	31-Mar-16	5649.2
4	31-Dec-15	5652.1
3	30-Sep-15	5664.9
2	30-Jun-15	5673.7
1	31-Mar-15	5666.7
4	31-Dec-14	5674.7
3	30-Sep-14	5674.1
2	30-Jun-14	5666.7
1	31-Mar-14	5669.1
4	31-Dec-13	5673.0
3	30-Sep-13	5669.9
2	30-Jun-13	5670.0
1	31-Mar-13	5676.0
4	31-Dec-12	5670.4
3	30-Sep-12	5665.1
2	30-Jun-12	5666.3
1	31-Mar-12	5662.4
4	31-Dec-11	5661.0
3	30-Sep-11	5663.1
2	30-Jun-11	5663.4