Genting declares dividend despite sharp 2Q losses

KUALA LUMPUR (Aug 28): Genting Bhd’s net loss ballooned almost six times to RM786.06 million for the second quarter ended June 30, 2020 (2QFY20) compared with RM132.3 million in the preceding quarter as the the COVID-19 pandemic dealt a big blow to its leisure and hospitality business.  

The quarter revenue of the diversified group, which owns two listed casino operators, was down 73% to RM1.11 billion from RM4.11 billion for 1QFY20.

Despite the steep losses, the group has declared an interim single-tier dividend of 6.5 sen, payable on Oct 1. The amount declared is the same as the previous corresponding quarter when the group posted a net profit of RM599.68 million on revenue of RM5.45 billion.

A loss before taxation of RM1.66 billion was recorded in 2QFY20 compared with RM218.2 million in the preceding quarter.

The group attributed the higher loss to the LBITDA (loss before interest tax, depreciation and amortisation) suffered by the leisure & hospitality segment in the quarter under review compared with an adjusted EBITDA (earnings before interest tax, depreciation and amortisation) in the preceding quarter.

“These were partially mitigated by lower impairment losses in the current quarter,” said Genting in its filing with Bursa Malaysia.

For the first half FY20 (1HFY20), Genting posted a cumulative net loss of RM918.37 million against a net profit of RM1.16 billion a year ago while revenue more than halved to RM5.22 billion from RM11.02 billion.

Genting attributed the cumulative loss to the lower EBITDA in 1H20, higher impairment losses and a share of loss from joint ventures and associates which was contributed mainly by Genting Malaysia Bhd (GENM) Group’s share of loss in Empire of RM178.1 million.

“The loss was due mainly to costs associated with the refinancing of Empire’s loans and depreciation and amortisation. GENM Group’s share of Empire’s operating loss was RM39.6 million. The profit before tax for 1H19 had included a gain of RM138.7 million from the disposal of a subsidiary,” it added.

Genting attributed the cumulative loss to the  lower EBITDA in 1H20, higher impairment losses and a share of loss from joint ventures and associates which was contributed mainly by Genting Malaysia Bhd's (GENM) share of loss in Empire of RM178.1 million.

“The loss was due mainly to costs associated with the refinancing of Empire’s loans and depreciation and amortisation. GENM group’s share of Empire’s operating loss was RM39.6 million. The profit before tax for 1H19 had included a gain of RM138.7 million from the disposal of a subsidiary,” it added.

On prospects, Genting warns that as the COVID-19 situation continues to evolve, pandemic-related fears and uncertainty may result in the slow recovery of the sectors related to tourism, leisure, hospitality and gaming industries.

In Malaysia, it said GENM is heartened by the positive reception to the phased reopening of Resorts World Genting (RWG). GENM will continue leveraging domestic demand to drive traffic growth and revenue whilst actively managing its cost base. Meanwhile, GENM is focused on the completion of the outdoor theme park which is targeted to open in mid-2021.

In Singapore, the group said as Singapore moves carefully towards the recovery phase from the pandemic, Genting Singapore Ltd (GENS) is working closely with the authorities on its SG$4.5 billion mega expansion plan (Resort World Sentosa [RWS] 2.0) to transform its Integrated Resort to be a centre piece of Singapore’s tourism. T

The timeline of the project, will however be impacted due to design changes required by safety management measures and disruption to the construction industry and global supply chain caused by the pandemic. It is also envisioned that new design changes will be necessary to adapt to the post-COVID-19 environment.

Meanwhile in relation to GENS’s Japan IR investment opportunity, GENS has participated in the Request-for-Concept (RFC) by Yokohama City and will continue to monitor the developments in anticipation of the launch of Request-for-Proposal (RFP) in the second half of 2020.

In the UK, a majority of GENM’s land-based gaming operations have recommenced since Aug 15. Given the unprecedented challenges, GENM will continue to be nimble in its approach at managing its cost structure to align with the new operating environment. Retail shopping outlets at Resorts World Birmingham and GENM’s interactive business continue to operate in line with expectations

In the US, Resorts World Casino New York City (RWNYC) and Resorts World Catskills (RWC) remain temporarily shuttered until further notice.

In the Bahamas, operations at Resorts World Bimini reopened on July 2 but have been suspended since July 25, amid renewed concerns from local authorities surrounding the pandemic. GENM will continue to proactively manage its operating cost structure as it navigates through the dynamic situation in the US and Bahamas.

In the meantime, development work for the expansion project at RWNYC is currently underway and GENM is working towards the completion of the first phase of the new 400-room hotel, which is expected to open by the first quarter of 2021.

Genting shares price closed unchanged at RM3.54, valuing it at RM13.55 billion. Some 7.25 million shares were traded. Year to date, the stock has shed 41% from RM6.05 at the end-December.

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