Genting's RM3.1 billion bet on New York gaming may backfire
Published on: Fri, May 09, 2025
By: Lee Min Keong, FMT Text Size: Genting Malaysia has invested US$724.4 million (RM3.1 billion) in Empire Resorts Inc since 2019. (Resort World Genting pic) PETALING JAYA: Genting Malaysia Bhd (GENM) has ramped up its bet on New York's gaming sector with its proposed takeover of Genting Empire Resorts (GERL), a move that some analysts say may backfire on the group. The deal has been flagged as expensive and potentially profit-dilutive by analysts and will likely be a financial drag on the integrated gaming and resort operator. The takeover also raised eyebrows as it is a related party transaction (RPT) involving the Genting group's founding Lim family led by Lim Kok Thay, who is also GENM's deputy chairman and chief executive. According to its 2024 annual report, the 73-year-old Lim and his son, Keong Hui, 40, have a deemed interest of 49.35% in GENM as of March 17, 2025. Keong Hui is the group's deputy chief executive and executive director. GENM is acquiring the remaining 51% stake in GERL that it does not own for US$41 million (RM177 million) from the Lim family's vehicle Kien Huat Realty III Ltd. The group currently holds a 49% interest in GERL, which wholly owns Empire Resorts Inc (ERI) that has gaming properties in New York state. As part of the deal, Kien Huat Realty III will also assign a US$39.7 million (RM170 million) debt to GENM that ERI owes to it. ERI owns and operates integrated casino Resorts World Catskills and video lottery terminal Resorts World Hudson Valley, along with mobile sports betting platform Resorts World Bet. GENM's RM3.1 billion investment GENM's investments in ERI prior to the latest acquisition totalled US$724.4 million (RM3.1 billion), after it made several capital injections through common and preferred stocks in recent years. Public Investment Bank (PublicInvest) has downgraded GENM to a 'trading sell' from 'neutral' in light of the proposed acquisition. In a recent note, it said the deal was an 'unfavourable' RPT that suggests 'corporate governance remains a concern' for the group. It views the group's US$724.4 million investment in ERI as 'financial assistance' to ensure the company remains operational under a competitive business environment in the US. PublicInvest noted that ERI remains a loss-making unit since GENM's initial acquisition back in 2019. 'After more than five years, the group has failed to turnaround ERI. We view this related party transaction negatively as it is likely to drag the group further with a higher share of losses,' it said. It added that between FY2020 and FY2024, GENM recognised total associated losses of RM160-RM280 million a year, the bulk of which it attributes to ERI. Meanwhile, US research firm CreditSights said the group's takeover of GERL is 'credit negative' due to the increased debt to support ERI's weak earnings outlook, and concerns over related party transactions. CreditSights, a Fitch Solutions company, said the deal will increase GENM's debt by US$300 million (RM1.3 billion) and worsen its leverage metrics by 0.3 to 0.4 times. It also said ERI's earnings outlook remains weak, pressured by competition and losses at its two New York resorts. However, it expects ongoing support for ERI from GENM as it has invested almost US$725 million in the business and views it as key to its New York expansion, lowering the refinancing risk for its US$300 million bond due in 2026. GENM's shares closed 1 sen or 0.6% lower at RM1.73 yesterday, valuing the group at RM10.27 billion. Year to date, the counter has fallen 23%. * Follow us on Instagram and join our Telegram and/or WhatsApp channel(s) for the latest news you don't want to miss. * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available.
Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
an hour ago
- The Star
Shanghai's luxury home sales boom as wealthy buyers flock to ‘safe haven' assets
Luxury home sales in Shanghai are defying a nationwide slump, as wealthy buyers snap up 'safe haven' assets amid expectations of further price gains – a trend likely to continue given scarce inventory and rising land costs. In the first half of this year, the mainland's financial capital led in transactions of premium homes, accounting for sales of 482 new homes priced above 50 million yuan (US$7 million), more than 80 per cent of the total across 30 cities, according to data compiled by China Real Estate Information Corporation (CRIC). For homes priced above 30 million yuan, transactions in the city reached 1,096 units, accounting for 60 per cent of the 30-city total. Two other tier-one cities, Beijing and Shenzhen, followed with 12 per cent and 11 per cent, respectively, the research institute added. Nationwide, sales of new homes priced above 50 million yuan jumped nearly 50 per cent from a year earlier to 591 units, while sales of lived-in units in the same price category increased 43 per cent to 173 in the same period, according to CRIC. The surge was underpinned by both demand and supply factors, analysts said. On the demand side, Shanghai's premium homes were emerging as a 'clear safe-haven asset, offering stability amid relatively high risks in other cities', said Lu Wenxi, an analyst at Centaline Property in Shanghai. 'Given the scarcity of residential properties in the city centre and the solid fundamentals of the homes themselves, investing in premium homes makes sense from both a risk and value-appreciation perspective,' he added. 'After all, there aren't many options for those with capital to deploy.' On the supply side, a policy move last June to scrap the cap on land prices in Shanghai has also helped to sustain the value of properties. Leading developers continue to focus their land acquisitions in prime locations within core cities 'as reflected in the rising land premium rates this year in tier-one and strong tier-two cities', said Shi Lulu, director of Asia-Pacific corporate ratings at Fitch Ratings. New home sales in China were expected to decline by about 15 per cent this year, according to an earlier forecast by Fitch. 'Premium projects in top-tier cities are expected to provide ongoing support for the performance of upgrade-oriented sales,' she said, adding that growth in the high-end segment could help the property sector temper the slowdown. Centaline's Lu said Shanghai's premium home prices would continue to rise. 'Land in the city centre is running out,' he said. 'With no land available, demolition becomes necessary, but the costs of demolition and relocation are rising each year, and housing price expectations are getting higher as costs increase.' Shanghai was also one of China's only cities that managed to defy a broad-based decline in new home prices in June, as the country's property slump is set to enter its fifth year, despite official measures to support the sector that once accounted for a quarter of the country's gross domestic product. Nationwide, new home sales fell to 9.7 trillion yuan in 2024 – less than half the level recorded in 2021, according to government data. - SOUTH CHINA MORNING POST
New Straits Times
4 hours ago
- New Straits Times
SpaceX to invest US$2bil in Musk's xAI startup, WSJ reports
NEW YORK: SpaceX has committed US$2 billion to xAI as part of a US$5 billion equity round, deepening the ties between tech billionaire Elon Musk's ventures as his artificial intelligence startup races to compete with rival OpenAI, the Wall Street Journal reported on Saturday. The investment follows xAI's merger with X and values the combined company at US$113 billion, with the Grok chatbot now powering Starlink support and eyed for future integration into Tesla's Optimus robots, the report added. In response to a post on X about whether Tesla, could also invest in xAI, Elon Musk said on Sunday, "It would be great, but subject to board and shareholder approval," without confirming or denying the Journal report on SpaceX's investment plans in xAI. SpaceX, xAI and Tesla did not immediately respond to requests for comment. Reuters could not immediately confirm the WSJ report. Despite recent controversies involving Grok's responses, Musk has called it "the smartest AI in the world," and xAI continues to spend heavily on model training and infrastructure.
New Straits Times
5 hours ago
- New Straits Times
Malaysia continues to lead global halal ecosystem
SANDAKAN: Malaysia continues to lead the global halal ecosystem but must remain competitive, innovative, and forward-thinking to sustain its position. Minister of Entrepreneur and Cooperative Development Datuk Ewon Benedick said halal is not solely about certification but also reflects values of quality, cleanliness, transparency and integrity. "The Ministry of Entrepreneur and Cooperative Development (KUSKOP) is committed to championing the growth of small and medium enterprises (SMEs) and cooperatives within the halal industry," he said when opening the KUSKOP Halal Success Programme here today. He said the halal industry is no longer exclusive to Muslims but has evolved into a thriving global economy with a market value of more than US$3 trillion. Ewon urged entrepreneurs to embrace innovation and step beyond their comfort zones, seizing opportunities not only in the domestic market but also by building brands that can penetrate international markets. "Make full use of programmes like Halal Success. It is more than just a training initiative. It is a platform opportunity to build the future. Take advantage of the guidance provided, expand your networks, and use this opportunity to build market credibility," he added. The KUSKOP Halal Success programme offers a comprehensive intervention platform, including technical, business and financing guidance for aspiring halal industry players.
