Stock drop, revenue miss raise red flags for Genting Malaysia
Investors are pulling away from Genting Malaysia Berhad as a result of the casino and resort operator’s poor financial results, mounting debt, and uncertain growth prospects. As a result, shares of the company have fallen to a five-year low.
Over the past year, the company’s shares have dropped 34.71 percent, closing on 3 April 2025 at RM1.70 (approx. €0.33), the lowest amount since November 2020, when the COVID-19 outbreak was at its peak. Over the same period, the shares of its parent company, Genting Berhad, likewise fell 27.55 percent to RM3.32 (approx. €0.64), while those of its sister business, Genting Singapore, did marginally better, down 11.09 percent to 75.5 Singapore cents (approx. €0.52).
Genting Malaysia is currently dealing with a string of downgrades. After the 2024 fiscal year financial results were lower than anticipated, at least six research firm lowered their estimates for the property. A year ago, many people were hopeful that profits would double. Now, that confidence has eroded.
Revenue drops amid index exit
The share price of Genting Malaysia was further impacted by the removal of the company from the benchmark FBM KLCI index at the end of last year, which caused index-tracking funds to reduce their holdings.
A net profit of RM251.28 million (€49.9 million) was reported by Genting Malaysia for the year that concluded on December 31, 2024. This represents a 42.5 percent decrease from RM436.79 million (€86.8 million) in the year prior. The market’s expectations were greatly exceeded by the results.
The dividend per share of the company was lowered from 15 sen to 10 sen last year. Yield-focused investors have not taken kindly to the move, which analysts say is meant to save money for future growth.
One of the suggested investments is the expansion of Resorts World New York City, which would cost $5 billion (€4.17 billion), provided a downstate casino license is obtained. Additionally, Genting is considering a potential entry into Thailand’s gaming industry, which might require an additional $3 billion (€2.5 billion).
Genting turning into a ‘value trap’
In the meantime, Genting Berhad revealed its first quarterly loss in two years, with a net loss of RM 169.38 million (€33.6 million) for the fourth quarter. Despite a slight increase in revenue, its net profit for the entire year fell 4.98 percent to RM 882.95 million (€175.2 million).
With over 60 percent of its RM 12.22 billion (€2.43 billion) in borrowings in US dollars, Genting Malaysia is vulnerable to fluctuations in interest rates and currency values.
Analysts caution that without any significant stimulus, Genting Malaysia could turn into a “value trap” despite its low valuation. Executive chairman Tan Sri Lim Kok Thay and his family recently bought over 27.66 million shares, which is a rare move that has been seen as a vote of confidence in the group’s long-term prospects.
