Genting Malaysia Berhad has investors pulling away from it after experiencing poor financial results and mounting debt. This has, in return, caused their shares to plummet to a five-year low, leaving little hope that profits would double, as was believed a year ago.
The shares of the operator’s parent company—Genting Berhad—also experienced a drop in stock prices, while its sister company—Genting Singapore—did much better.
Despite being in a financially difficult spot, Genting Malaysia is still considered a place full of traditional casino games that have won over the crowd, such as poker and slots. Despite their great offer, the operator’s poor financial results did call for a string of downgrades, as the year 2024 didn’t pan out the way everyone hoped.
Genting Malaysia shares important numbers
This casino operator reported a net profit of €49.9 million, ending on December 31, 2024. The numbers show a steep drop in comparison to the year prior, which saw a net profit of €86.8 million. The market and its participants had high hopes for Genting Malaysia, but the numbers show the results didn’t meet expectations.
While land-based casinos might be left dealing with less than satisfactory results, there’s one area of the industry that’s showing signs of significant growth – online casinos. Online gambling offers all the games players in Malaysia love, along with the added convenience of accessibility and payment options galore.
At the moment, the online gambling sphere in the country is still unregulated, but the Malaysian government did confirm they are moving toward a more regulated environment. In the meantime, the country’s residents can access international iGaming platforms, which work perfectly, as long as players have a stable Internet connection and the necessary equipment. Their versatility and generous bonus offers have turned these platforms into a worldwide powerhouse, and Malaysia’s residents weren’t left out.
While the online gambling scene flourishes, Genting Malaysia’s parent company deals with negative results of its own. The company revealed its first quarterly loss in two years, experiencing a loss of €33.6 million. Even though their revenue did experience a slight increase, their yearly net revenue still fell to €175.2 million – a 4.98% drop.
The operator’s growth opportunities are limited, although still there. One of their suggested investments is the expansion of Resorts World New York City, which would require obtaining a casino license. It would also imply investing €4.17 billion, which is a steep sum for a struggling business. Genting’s other option for growth is a potential expansion to Thailand’s gaming market, entailing an investment of €2.5 billion.
Gambling is the next big thing in Thailand, with the online gambling industry projected to grow by 5.13% from 2024 to 2028, with some surveys from October 2022 showing that 30.34% of the country’s population was involved in some kind of sports betting. Should Genting expand to Thailand’s market, it could potentially make the most lucrative decision for its future.
Genting could become a ‘value trap’
With its bad financial results and with over 60% of its €2.43 billion borrowings in US dollars, Genting is in a tough spot. The operator’s interest rates and currency values are prone to significant fluctuations, which is bad news for investors, both former and potential ones.
Experts now warn that, without significant interventions, Genting Malaysia could become a ‘value trap’ – an investment that appears undervalued but actually isn’t. This might deceive potential investors and have them believe they are purchasing an attractively priced stock that will perform well when, in reality, there’s very little chance of coming out of the ordeal as a winner financially.
However, Genting and its investors recently received a huge vote of confidence. Alongside his family, the executive chairman, Tan Sri Lim Kok Thay, bought more than 27.66 million shares, clearly demonstrating the faith he has in Genting’s long-term prognosis.
The bottom line
Malaysia’s first gaming operator to attain accreditation from the Responsible Gaming Council isn’t doing so well at the moment. Despite being a five-time winner of Malaysia’s Leading Resort award, the casino operator is facing a loss of profit and a steep drop in share prices.
Genting Malaysia isn’t the only one in need of a financial boost, as its parent company is also facing similar results. Not all hope is lost, as recent investments from the executive chairman show there’s belief in things improving in the future. Until then, Genting Malaysia remains a great place for players, but an ultimately dangerous ground for the investors.
