Published August 27, 2009

Genting Q2 profit drops 26%

It cites wins by big spenders at its hilltop casino for fall

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(KUALA LUMPUR) Genting Bhd, Asia's largest listed casino operator, said that second-quarter profit fell 26 per cent from a year earlier on wins by high spenders at its hilltop casino in Malaysia and as its plantation unit recorded lower income.

Net income slid to RM214.5 million (S$87.6 million), or 5.8 sen a share, from RM291 million, or 7.86 sen, a year earlier, according to a company statement yesterday. Sales declined to RM2.1 billion from RM2.2 billion.

Genting, which gets two-thirds of sales from hotels, gambling and theme parks, has invested in businesses including power generation and palm oil to manage swings in casino revenue. Still, the company plans to open a S$6.6 billion casino-resort in Singapore early next year.

The Singapore resort 'has a good long-term potential, and if you're in for the long haul, Genting is a good stock to buy', said James Ratnam, an analyst at TA Securities Holdings Bhd.

Genting shares have risen 78 per cent this year, more than the 34 per cent gain in the FTSE Bursa Malaysia KLCI Index.

Pre-tax profit at its casino, hotel and theme park business fell 12 per cent to RM490.2 million, while pre-tax profit at its plantations unit, its third-biggest earner, fell 55 per cent to RM69.3 million. The power division posted a profit of RM79.5 million, the second-largest earner, Genting said.



Earnings from Genting Highlands Resorts 'decreased due to weaker luck factor in the premium players business', Genting said. 'Lower revenue was recorded from all the divisions' except for the power business, it said.

Genting's Singapore project is one of two casino-resorts that the government has allowed to be built in the city-state as part of its goal to lure 17 million visitors and triple annual tourism revenue to S$30 billion by 2015. Genting Singapore plc, partly owned by Malaysia's Genting, said on June 25 that the resort in Singapore is set to open in early 2010. -- Bloomberg