Genting Malaysia Bhd’s (GENM) net profit jumped five-fold in its second quarter on a surge in foreign exchange (forex) gains as the ringgit strengthened against the US dollar.
The increase was attributed mainly to RM184.6 million in foreign exchange gains from a stronger ringgit against the greenback, as most of its debts are denominated in foreign currencies.
The casino and resort operator’s net profit skyrocketed 407% to RM416.75 million for the second quarter ended June 30 (Q2 FY2025) from RM82.24 million a year ago.
Quarterly revenue rose 9.3% to a record high of RM2.92 billion from RM2.67 billion a year earlier, according to its bourse filing yesterday.
For the first six months of FY2025 (H1 FY2025), net profit jumped 250% to RM489.33 million even as revenue only rose 1.5% to RM5.51 billion.
The stock rose as much 5% or 10 sen to RM2.08 earlier today before closing up 3% or 6 sen at RM2.04, valuing the company at RM12.11 billion. A total of 11.3 million shares were traded.
GENM’s profit was also buoyed by improved performance of its Malaysian operations, which saw a 16% rise in earnings before interest, taxes, depreciation and amortisation (Ebitda) to RM581.5 million, driven by higher business volume and improved margins.
It also posted an 8% rise in the UK and Egyptian operations’ Ebitda, aided by contributions from the newly acquired Genting Casino Stratford in the UK. However, these gains were partly offset by a 33% drop in Ebitda from its US and Bahamas businesses.
Despite the huge increase in quarterly earnings, its first half results were largely within consensus estimates of research houses.
TA Research said that excluding the forex gain, GENM’s H1 FY2025 core profit of RM284.3 million accounted for 66% of its full-year forecast and 57% of consensus estimates.
“However, we consider this as within expectations as costs of operation are expected to rise in H2 FY2025,” it said in a note today.
GENM is expected to grapple with rising costs from the sales and service tax expansion and electricity tariff hike, as well as mandatory employer pension contributions for foreign workers.
TA maintained its “buy” recommendation and FY2025-2027 earnings projections with a target price of RM2.24. However, it cut its dividend projections for FY2025/2026/2027 to 8 sen, 10 sen and 12 sen.
Uncertainties in US market
Some research houses are cautious about GENM’s outlook, especially its overseas business.
Hong Leong Investment Bank said challenges and uncertainties at its foreign operations “pose downside risks” to its Malaysian operations that saw a recovery in Q2.
Public Investment Bank said the operating environment in the US market will continue to be challenging given the weak economic outlook with the possibility of “a recession that could affect consumer sentiment and spending on entertainment activities”.
Lim Kok Thay – the son of Genting founder Lim Goh Tong – and his son, Keong Hui have a deemed interest of 49.35% in GENM, according to its 2024 annual report.
Kok Thay, 73, is the group’s deputy chairman and chief executive while Keong Hui, 40, is the deputy CEO.
