This article first appeared in The Edge Malaysia Weekly on March 3, 2025 - March 9, 2025

INCREASINGLY, the stake held by Genting Bhd (KL:GENTING) in its subsidiary Genting Singapore Ltd (GenS) appears not to be reflected in the share price of the parent company, a development that is said to have prompted its major shareholder to look at ways to extract better value from its investments in the island republic.

Genting is the single largest shareholder in GenS, which commands a market capitalisation of S$9 billion (RM30 billion). At the same time, Genting’s 52.6% stake in GenS is worth RM15.8 billion — more than the company’s entire market capitalisation of around RM12.8 billion. This effectively means that the market has not ascribed any value to Genting’s majority stake in GenS.

But while GenS is sitting on S$3.6 billion in cash and virtually no debt, its parent company is highly geared and weighed down by debts, including those in Genting Malaysia Bhd.

The sole casino operator in Malaysia has long- and short-term borrowings of a hefty RM40 billion, which contributes to a higher cost of financing. Its substantial borrowings are largely due to its expansion in Las Vegas that cost it US$4.3 billion in 2021 and made Resorts World Las Vegas the most expensive resort-cum-casino built on The Strip.

Industry sources say Genting’s management is exploring ways to optimise its investments in Singapore to ensure better returns to shareholders.

Genting is majority controlled by the Lim family, headed by Tan Sri Lim Kok Thay, who is also the chairman of GenS.

“GenS is sitting on all cash without any borrowings except for lease liabilities that are negligible. But Genting can only benefit from the dividend flow, which is also restrictive considering that GenS operates in a highly regulated environment that requires constant upgrading of facilities.

“Due to the strict regulatory environment in Singapore, GenS cannot easily bring in partners to help fund its expansion in the city-state and also into the region in Thailand. Any new shareholder coming into GenS will be subject to the strict scrutiny and review of the Singapore gaming authorities,” says a source.

It is learnt that the strict operating environment and restrictive utilisation of cash are proving to be a challenge for the major shareholder in exploring ways to optimise its investments in GenS.

The idea of GenS declaring higher dividends was also brought up by a shareholder at the annual general meeting last year, where it was suggested that the company pay a higher dividend of 3.5 cents instead of the usual 2 cents, given its growing cash pile and accumulated profit of S$2.8 billion.

However, GenS’ management pointed to its commitment to expand and improve the attractions at Resorts World Sentosa (RWS), which is the company’s integrated resort. On this score, GenS has embarked on RWS 2.0 that will cost the company S$6 billion over the coming years to 2030.

At the moment, GenS’ non-gaming revenue accounts for 30% of total revenue, so the overall objective is to increase its contribution. GenS needs to improve its offering as the authorities in Singapore want RWS to become a compelling tourist destination and have indicated that GenS needs to raise its game.

In November last year, the Gambling Regulatory Authority of Singapore (GRA) renewed RWS’ casino licence for two years instead of three after an evaluation of its performance between Jan 1, 2021 and Dec 31, 2023. The renewal took effect from Feb 6 this year.

GRA, in a statement on the licence renewal, stated that RWS’ ability to promote its integrated resort as a tourist destination was unsatisfactory and that the resort requires rectification and substantial improvement. The next evaluation of RWS will be carried out next year.

GenS, in an announcement, stated that the tourism industry in Singapore in general, including RWS, faced significant challenges during the evaluation period, which coincided with the global pandemic. Nevertheless, RWS will accelerate its transformation to refresh and rejuvenate existing offerings to widen its appeal as a tourist destination with RWS 2.0.

Lim had told shareholders that a chunk of the spending on RWS would go towards enhancing its non-gaming attractions rather than the casino operations. He also said the landscape of the gaming industry was changing, where more countries would follow Singapore’s emphasis on an integrated resort as opposed to a casino-only development.

On regional expansion, Lim had told shareholders last year that the Singapore government generally does not interfere with investment decisions. However, given the gaming regulations, the company expects any decision on foreign ventures to be subject to scrutiny and review. Foreign ventures may also be impacted by the need for potential partners to meet Singapore’s regulatory standards for probity.

Genting’s operations in Singapore have been the biggest contributor to the group’s earnings before interest, tax, depreciation and amortisation (Ebitda). The unaudited results for the financial year ended December 2024, which were released last week, showed that the Singapore operations contributed nearly 40% of Genting’s Ebitda of RM8.8 billion.

Notwithstanding the contribution of its Singapore operations, Genting recorded its first quarterly loss in two years in the fourth quarter on the back of lower contributions from Genting Malaysia Bhd (KL:GENM) and the Las Vegas operations and higher operating expenses and finance costs.

Consequently, for the full year ended December 2024, Genting recorded an unaudited profit of RM882.9 million against RM929.2 million in 2023.

Genting has always wanted to list Resorts World Las Vegas, a move that would allow it to reduce its borrowings and improve its balance sheet. However, the exercise is likely to take longer than expected because of challenges in the operations in Las Vegas, not to mention stiff competition.

In August last year, the Nevada Gaming Control Board (NGCB) filed a complaint against Resorts World Las Vegas for allowing illegal bookmakers and a convicted person of an illegal gambling business to gamble on their premises.

Following the complaint, Genting established a board of directors in Resorts World Las Vegas. It is also communicating with the NGCB to come to a resolution on the matter. 

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