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Genting Quarterly Net Falls as Singapore Casino Takings Drop

Genting Bhd. (GENT), which controls Asia’s second-biggest casino operator by market value, said second- quarter profit fell 21 percent after reporting lower earnings at its Singapore gaming resort.

Net income for the three months ended June 30 dropped to 534.5 million ringgit ($171 million), or 14.4 sen a share, from 673.2 million ringgit, or 18.1 sen, a year earlier, the company said in a filing to the Kuala Lumpur stock exchange yesterday. Revenue was little changed at 4.5 billion ringgit.

Genting controls Asia’s second-biggest casino operator Genting Singapore Plc (GENS), which earlier this month reported a 43 percent drop in second-quarter profit to S$138.5 million ($110 million). This offset higher contributions from the group’s gaming businesses in Malaysia, the U.K. and the U.S., where Resorts World Casino New York City began operations in October.

“The global economy looks increasingly unfavorable,” Genting said in the statement. The Singapore casino resort “will continue to see similar narrower profit margins as in the current quarter,” it said.

The earnings were also lower after last year’s profit was boosted by a one-time gain of 144 million ringgit, the filing showed.

Genting has fallen 18 percent this year in Kuala Lumpur trading, compared with a 7.5 percent increase in the benchmark FTSE Bursa Malaysia KLCI Index. It rose 0.1 percent to 9.01 ringgit as of 10:37 a.m. local time.

Changing Regulations

“The volatile Singapore market is currently facing some headwinds with the ever-changing government regulations,” Hoe Lee Leng, an analyst at RHB Capital Bhd., wrote in a report today. “We recommend investors switch over to Genting Malaysia, whose earnings are more defensive and has more growth leverage.”

Genting Malaysia Bhd. (GENM), operator of the country’s only casino resort, jumped 2.4 percent, its biggest intraday gain since Aug. 9. The stock was upgraded to the equivalent of buy today by the broking arms of Malayan Banking Bhd. and RHB.

The group’s plantation division saw profit contributions drop 52 percent to 92.9 million ringgit on lower palm oil prices and higher costs. The group’s Malaysian estates are expected to boost production in the second half of this year, Genting said.

Pretax profit from power generation increased 14 percent to 141.6 million ringgit, boosted by its first earnings from a wind farm in India.

Going forward, energy earnings are likely to fall with the proposed sale of Malaysia’s Kuala Langat power plant to 1Malaysia Development Bhd., according to the statement. The group expects to record a one-time net gain of 1.9 billion ringgit from the disposal, it said in an Aug. 13 statement.

To contact the reporters on this story: Gan Yen Kuan in Kuala Lumpur at ykgan@bloomberg.net; Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net

To contact the editors responsible for this story: Barry Porter at bporter10@bloomberg.net; Stephanie Wong in Shanghai at swong139@bloomberg.net

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