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Case Study:  

Genting Bhd  
(15 November 2018)  

Step #1:  
What does it do?  

Genting Bhd is a huge conglomerate that is involved in leisure & hospitality, oil
palm plantations, power generation, oil & gas, and property development with
main assets held in key listed subsidiaries such as:

a. 49.3% stake in Genting Malaysia Bhd.

b. 52.8% stake in Genting Singapore Plc.
c. 51.6% stake in Genting Plantations Bhd.

Step #2:  
Check Financial Results  

Figures in RM Million unless stated otherwise

Group Shareholders’ Earnings per Return on
Year Revenue Earnings Share (Sen) Equity (%)

2013 17,111.7 1,789.2 48.4 7.17%

2014 18,216.5 1,356.5 36.5 5.16%

2015 18,100.4 1,272.9 34.2 3.99%

2016 18,365.8 2,120.6 57.0 8.09%

2017 20,019.6 1,445.3 38.3 4.28%

Genting Bhd has reported steady growth in sales over the last 5 years. Earnings
however did not. It has fallen from RM 1.79 billion in 2013 to RM 1.45 billion in
2018. Genting Bhd has 5-Year Return on Equity (ROE) of 5.74%. It means, it had

made RM 5.74 in annual earnings from every RM 100 in shareholders’ equity in
the 5-year period from 2013 to 2017.

Step #3:  
Check Quarterly Results 

Figures in RM Million unless stated otherwise

Period Q3 2017 Q4 2017 Q1 2018 Q2 2018 Total

Revenue 5,039.6 5,258.6 5,250.8 4,823.3 20,372.3

Earnings 191.1 133.2 602.7 383.5 1,310.5

EPS (Sen) 5.03 3.48 15.74 10.01 34.26

Evidently, Genting Bhd has recorded unpredictable patterns of earnings for the
last 5 years. For the last 12 months, it made RM 20.4 billion in revenue and RM
1.3 billion in shareholders’ earnings or 8.57 sen in earnings per share (EPS).

Step #4:  
Check Balance Sheet Strength 

As at 30 June 2018, Genting Bhd has reported non-current liabilities of RM 27.4

billion. Its gearing ratio is 48.4s% based on its total equity of RM 56.5 billion. Its
current ratio is 4.11 with a cash balance of RM 28.3 billion.

Step #5:  
Check Future Prospects  

Genting Bhd derived bulk of its income from Genting Malaysia Bhd. A few days
ago, I did a case study on Genting Malaysia Bhd where I listed down its plans &
material announcements which would impact its financial results in the future.
Here, I would ‘copy & paste’ them as they would also affect Genting Bhd.

Belanjawan 2019
On 2 November 2018, the Ministry of Finance has announced a revision in both
casino license fee from RM 120 million to RM 150 million a year and the casino
duties from 25% to 35% starting on 1 January 2019.

Genting Integrated Tourism Plan (GITP)

Genting Malaysia has embarked on a 10-Year GITP Master Plan to transform its
Resorts World Genting (RWG). This includes the introduction of:

a. the First World Hotel 3

b. the new Awana SkyWay Cable Car System
c. newly refurbished Theme Park Hotel

d. new Crockfords Hotel
e. the World’s First Twentieth Century Fox World Theme Park
f. the new Skytropolis Indoor Theme Park
g. Genting Highlands Premium Outlet

Genting Malaysia is preparing to roll out of the Skytropolis Indoor Theme Park
and the highly anticipated 20th Century Fox World Theme Park.

Resorts World New York City (RWNYC) Expansion

Genting Malaysia is in the midst of its US$ 400 million RWNYC expansion which
would introduce:

a. a 400-room hotel
b. F&B outlets
c. Retail Stores and Entertainment Facilities

This project is anticipated to be opened in phases starting from the end of year

As I write, Genting Bhd is trading at RM 6.82 a share. So, is this a great time to
buy / hold / sell shares of Genting Bhd?

Step #6:  
Check P/E Ratio  

First, P/E Ratio is best used for stocks that grow profits consistently. Hence, the
company is not a good candidate for P/E Ratio as it delivered inconsistencies in
quarterly earnings / annual earnings over the last 5 years.

If we use its latest 12-months EPS of 34.26 sen as calculated in Point 3, Genting
Bhd’s current P/E Ratio is 19.91.

P/E Ratio Formula:
= Stock Price / EPS
= RM 6.82 / RM 0.3426
= 19.91

Key Statistics:
5-Year P/E Ratio Lowest: 14.04
5-Year P/E Ratio Highest: 24.03
5-Year P/E Ratio Average: 21.10
Current P/E Ratio: 19.91

Step #7:  
Check PEG Ratio  

There is no growth in shareholders’ earnings for the last 10 years. As such, the
PEG Ratio is not useable for Genting Bhd.

Step #8:  
Check P/B Ratio  

On 30 June 2018, Genting Bhd has reported net assets a share of RM 8.76.

At current price of RM 6.82, its current P/B Ratio is 0.78, the lowest in the last
5-year period.

P/B Ratio Formula:

= Stock Price / Net Assets a Share
= RM 6.82 / RM 8.76
= 0.78

Key Statistics:
5-Year P/B Ratio Lowest: 0.86
5-Year P/B Ratio Highest: 1.54
5-Year P/B Ratio Average: 1.11
Current P/B Ratio: 0.78

Step #9:  
What’s my Dividend Yield?  

Excluding special dividends, Genting Bhd has paid out RM 0.145 in dividend per
share (DPS) for 2017. Based on its current stock price of RM 6.82 a share, gross
dividend yield to be expected is 2.13%, below 3% fixed deposit (FD) rates which
is offered by local banks currently.

Dividend Yield Formula:

= (DPS / Stock Price) x 100%
= (RM 0.145 / RM 6.82) x 100%
= 2.13%

Key Statistics:
5-Year Dividend Yield Lowest: 0.44%
5-Year Dividend Yield Highest: 3.62%
5-Year Dividend Yield Average: 1.69%
Current Dividend Yield: 2.13%

Step #10:  
Understanding the Relationship of  
Genting Bhd’s Stock Price and its Shareholders’ Earnings  

Genting Bhd’s stock price had moved somewhat in tandem with its earnings for
the last 10 years. Stock price had acutely increased from 2008 to 2011 which is
in line with its rapidly increasing earnings during the period. However, Genting
Bhd’s stock price had gradually dipped and remained stagnant which reflected
its dip and subsequently, flat earnings from 2013 to 2017.

As at 10 November 2018, we have the following:

Step Criteria Results

Past Growth Sales & Profit Decline

1 Present Inconsistent Profits

Future Read Step #5

P/E Ratio 19.91

PEG Ratio n/a

P/B Ratio 0.78

Gross Dividend Yields 2.13%

SMA-Crossover Method Downtrend

Ian Tai 
Founder of Bursaking.com.my  
and Bursakingwebinar.com  

The case study above is intended for education & illustration purposes and is
strictly not intended to be an investment advice or recommendation to buy /
hold / sell the security mentioned.

If you need specific investment advices, please consult a qualified or relevant

professional investment advisors. No warranty is made in respect to the case
study’s accuracy, adequacy, reliability, applicability, or completeness of these
information contained.

The author disclaims any reward or responsibility for any gains or losses arising
from direct and indirect use & application of any contents of the case study