SOUTH EAST ASIA 24
MALAYSIA
Genting sees more clouds ahead Genting Malaysia, which faced a roller coaster of a year in 2018 amidst lawsuits and regulatory changes, is expecting another challenging year ahead.
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n its annual report, Chairman and CEO Resorts World Genting property under the Tan Sri Lim Kok Thay said the steep Genting Integrated Tourism Plan. The upgrades increases in casino duties and license involved adding more non-gaming attractions, fees announced in last year’s budget as well as expanding its casino floor space. are likely to begin to bite into earnings Lim said the group was beginning to from 2019 onwards. As a result, the group feel the benefits from the expansion, with will continue to review its cost structure. visitation gaining 10 percent in 2018 to 25.9 “This includes reducing or delaying million visitors. For 2019, the outlook for capital expenditures and the implementation international tourism remains “moderately of various cost rationalisation initiatives positive,” though geopolitical tensions may such as manpower optimisation,” he said. affect consumer confidence in certain The budget included a 10 percentage economies, he added. point increase in tax to 35 percent of gross Last year saw the addition of more dining gambling revenue, as well as hikes in annual options at the SkyAvenue entertainment license fees and dealer complex and the newly licenses. The increases refurbished First World were much higher than Plaza. It also opened We are had been expected. Medan Selera, a halalManagement has certified eatery and particularly indicated that the introduced RedTail and concerned about group’s EBITDA margin Empire by Zouk, two had been at about of the five distinctive the weak VIP 35 percent prior to destination zones in the business due to the tax hike and in a expansive Zouk Atrium. worst-case scenario It also completed the stiff competition. that margin could soft launch of the newly shrink to 25 percent. refurbished Skytropolis Some analysts say Funland indoor theme the cost-cutting program may harm the park, which offers more than 20 rides for group’s VIP business. all ages, and rolled out The VOID, the first The group posted a 10 percent contraction location-based hyper-reality experience in its VIP business in the fourth quarter of last centre of its kind in Asia. year, while the mass segment gained 4 percent. However, the centerpiece of the upgraded “We are particularly concerned about the resort was to have been an outdoor theme weak VIP business due to stiff competition,” park in a joint venture with Twentieth analysts at TA Securities said in a recent note. Century Fox. Plans for the attraction remain “This is especially true for this year when the mired in legal proceedings after the U.S. group is mulling over a cost rationalisation company pulled out of the venture in late program, which may include cutting junket’s 2018, prompting a breach of contract lawsuit commissions, to mitigate the impact of an from Genting and a counter-claim from Fox. additional 10 percent gaming tax.” “The development plans and options for Genting is now coming to the end of a the outdoor theme park are being reviewed RM10.4 billion ($2.5 billion) revamp of its amid ongoing legal proceedings,” Lim said.
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Asia Gaming Briefings | May 2019
“The group remains committed to the outdoor theme park at RWG as a growth initiative in Malaysia.” It’s not the only legal issue overhanging the company. On May 30th, the High Court is set to hear a challenge Genting has made to a Ministry of Finance amendment to tax incentives it received under the GITP program. While in the U.S., the group says it’s continuing to work with the Mashpee Wampanoag Tribe to push for the reaffirmation of the Tribe’s land in trust status, which is needed for a planned resort development to go ahead. Genting said it will work with the tribe in both the U.S. Congress and/or in federal courts to secure the affirmation. Genting recognised a loss of RM83 million last year, mainly due to an impairment loss from its investment in promissory notes to the tribe. “The impairment loss can be reversed if and when the Tribe’s land rights are secured and the promissory notes are assessed to be recoverable,” it says.
