Head I Win, Tail You Lose
Incorporated in 1984, converted into a public limited company in 1987. Genting was listed in SGX in Dec-2005. Key activities of the company are development, management and operation of integrated resorts. The company owns Resorts World Sentosa as well as hotels in Singapore.
Revenue in 2018 grew 6% to $2.54B. Net earning was 26% higher at $755M.
Gaming revenue grew 6% to $1.68B and constitute 66% of total revenue.
In 2010, Gaming contributed 85% of total revenue. Since 2016 revenue have steadied with signs of improvement.
Non-Gaming revenue increased 7% to $857M and constitute 34% of total revenue. In 2010, non-Gaming contributed 12% of total revenue.
Assets managed in this portfolio includes:
Singapore Oceanarium including Maritime Experiential Museum
Adventure Cove Waterpark
The group has also committed $4.5B to expand the integrated resort by 2020. This includes:
Super Nintendo World
Increasing hotel rooms inventory
Japan Integrated Resort
Japan is currently conducting feasibility studies and is at the Request-for-Concept stage. It is still premature to determine which company is likely to win the rights for development and if it will result in collaboration between competitors.
Gaming entrance fee was increased from $100 to $150 in Apr-2019.
If we were to factor in inflation over the years, $150 do not seem excessive.
Increase in tax from Mar-2022 will however have an impact on Genting's bottom line.
Non-Gaming contribution to total revenue have been growing steadily from 12% in 2010 to 34% in 2018. This is likely to continue with $4.5B committed to new entertainment facilities.
As non-Gaming revenue mix increases, tax increase from Mar-2022 is less likely to impact Genting earning significantly as widely feared.
Japan Integrated Resort is a wild card. It is difficult to speculate if Genting will win the coveted contract. Regardless, the foundation for growth is in place with expansion in Singapore non-Gaming facilities.
To stay competitive and relevant, it is imperative that a company reinvest its earning for future growth. Whether $4.5B is too much or just enough is really up to individual investor judgement.