Yup. It is true or SGD2000 for unlimited one year entry on a single casino(Resort or Sands). It may seems expensive but if the Singaporean travel all the way up to Genting, it may incur cost including hotel, transportation and not to mention time. So, although the SGD100 may seem expensive, but, it may be cheap for Singaporean after taking into account all the cost. But the amount of Singaporean in Genting Highland is not big. The bulk of the customer is still from Malaysia. But, Genting Highland may lose out in terms of VIP visitor as the tax rate in Singapore is cheaper compared to Malaysia.

Yup. The investment on some small casinos(Empire and another native Indian casino) in US is by Lim's Family private arm Kien Huat Realty. However,that bags the problem of conflict of interest and corporate governance because their private arm are investing in the same line of business as the listed arm (genting, genm and gens) which is the casino business. Technically speaking, if the Lim family find a very profitable casino venture, they can take it on using their private arm instead of their listed firms to enjoy 100% of the profits. It may be quite possible that those casinos in US have approach the Lims with the intend to cooperate with Genting, but, the Lims decide to use their private arm because it is so profitable. The Lims have done such a deal before with another red indian tribe using Kien Huat. I read somewhere that they make USD few hundred millions++ from that deal. Even the chief of that indian tribe go to visit uncle lim during his funeral.

I am not sure about bursa requirements, but, shouldn't a listed firm controlling shareholder and management should not be allow to engage in the same line of business in their private capacity? I am surprised there are no disclosure in Bursa that come out when I first heard of that deal during November. Malaysian companies and management are very good at privatizing profits and socializing risks.

This post has been edited by the snowball: Jan 24 2010, 12:11 PM

I have no problem with them operating their own business as long as it is not the same business as the listed entity. But, their private firm are involve in Casino business which is the major revenue contributor of Genting group. By involving in the same business in their private entity, they may be tempted to take all the good deals to Kien Huat and leave the lausy deal to Genting.

I think it is illegal in certain common law country for directors or executives to take away the business opportunities of the company. But not really sure about Malaysia.

Genting have a cash cow in GENM but their corporate governance really haiz...

It is a good thing they call it off. Basically, Walker Digital is an investment mistake made by the Lim family private arm Kien Huat Realty. But, in order to reduce the loss from this mistake, they do a related party transaction and sell the failed investment to GENM to recoup the mistake. Burried deep into GENM financial statement for this period is an impairment loss for Walker Digital worth RM108million. They bought the firm at RM 227 million (at current USD-MYR exchange rate). It is about 50% write off in less than one and a half year when there is an uptick in casino business and gaming business globally.The timing of such a write off is very suspicious. These just shows that the family know it is a bad business all this while. They are waiting for a right time to write off the thing without creating much fuss i.e. a time when GENM result improve significant enough to cover the loss from Impairment Loss so that the YOY change do not look that different. Investors tend to look at the bottom line figure, when it does not fall or change too much, they would not ask "why?".The improving result in GENM give this quarter give them just the right opportunity to do so. Basically, GENM just bail out the Lim family from a bad mistake.

GENM and Genting is basically a company with a good business(Genting Highland and Sentosa) but with an incompetent and overpaid CEO that do not know what to do with the cash and put his own interest over that of the minority shareholders. It has been a long time we heard that they are looking for opportunity for acquisition, but they seem to be unable to find anything to buy or perhaps are saying that to appease the shareholder. With the current management track record in Star Cruise(Genting HK) and Genting UK, it is better for them to return the cash.

It is ok to buy into a company with bad management and sound and defensive business, but your entry price need to be low and must realize that GENM and Genting would not be able to fulfill their full potential with the current management in place. Do take note of the intensifying competition of casinos in SEA, there are new ones coming up at Phil and Vietnam. Genting Highland will largely be shielded but Sentosa will face some pressure.

This post has been edited by the snowball: May 30 2010, 03:21 PM

Welcome. I think to reduce corporate governance risk, the best listed Genting Group vehicle to own is Genting Berhad cause it is directly own by the family arm, Kien Huat Realty. The rest of the companies are more indirectly related to the Lim family like GENM, so, they can do whatever they like with the company.

For Indonesia, initially Bintan Island seemed to have awarded a license to Landmark, a company which Genting have significant holdings, but, after that, some political problem and the casino license seem to be on hold or been cancelled for now. I am not really sure whether other government will allow Genting to build the casino in their country after they see what Genting build on Sentosa. Because, if you compare the Sentosa Resorts and the Marina Bay Sands, Marina Bay Sands(MBS) is really 2 or 3 times more grand than Genting. Punters regardless of rich or poor would prefer MBS because the minimum bet in both casino is the same.

I have to agree that their cash management left much to be desired. They don't know what to do with the cash, but, refuse to return to the shareholders. Now, they even waste money to buy some bank in Sri Lanka.

This post has been edited by the snowball: May 30 2010, 10:00 PM

Ya but the exposure is rather small as it is via Genting Hong Kong(formerly Star Cruise). I think Genting want to get its hand on every single casino pie in the region.


Got one thing that Genting Sentosa may beat MBS is that the parking cost for MBS is obscenely expensive. Even after they give you a discount, it is still very expensive to gamble there for a night if you are driving.

It is actually Star Cruise but it has been renamed as Genting Hong Kong as part of the rebranding exercise that Genting group is currently embarking like Resorts being renamed as GENM, Asiatic and Genting Plantation etc...

Genting Hong Kong is listed in the HKEX.

Haha, I think I have misunderstood you previously on your meaning of exposure with my own. I believe your "exposure" means the exposure to the Phil casino to the Phil market, in this case, the exposure is huge as the Resorts World at Manila is actually part of the Phil govt plan to develop a similar Singapore IR-style resort. While I have misunderstood your definition of exposure as the exposure of GENM to RW Philipines earnings, in this case, the exposure is rather small as GENM owns 19+% of GEN HK while GEN HK in turns own roughly 50% of RW Phil, so in total the exposure to GENM is around 10% while to Genting it is even smaller at less than 5%.

But, this exposure is not exposure in accounting sense as GENM ownership in GEN HK is less than 20%, hence,based on accounting rule, it is not consolidated into GENM earnings, so no matter how well RW Phil did, it will not be reflected in GENM P &L. GENM ownership in GEN HK is actually classified as Available-for-Sale Securities(AFS). As an AFS, any changes in the share price of GEN HK need to be reflected in GENM P&L, so, you will see a huge fair value gain or losses in GENM P&L every quarter due to changes in GEN HK share price. But, if RW Phil did well, GENM should benefit from the increase in share price of GEN HK.

Actually, the accounting treatment of GEN HK kinda answer your question on the state of Star Cruise or GEN HK as it is called now. GEN HK performed so badly that it has been a drag on GENM earnings and share price that I believe the Lim family actually secretly funded famous Malaysian financier Datuk Chua Ma Yu(CMY) to take over 14% of GEN HK shares from GENM so that the result of GEN HK will not be consolidated in GENM books. This is merely cosmestic changes on GENM accounting treatment, the fundamentals of GEN HK remains bad. But, it did hide the fact somewhat from GENM shareholders that GEN HK is burning cash.I have a reason to think so as I don't think CMY have so much money to buy 14% of GEN HK plus I don't see any reason for him to splurge a significant part of his wealth to buy a NON-CONTROLLING and minority stake in GEN HK, so I think it should be funded secretly by Lim family. Haha..that's my conspiracy theory but I think it is rather valid as I don't see any other motive for CMY to spend a huge chunk of his wealth on a non-controlling stake in a cash-burning company.

As for the state of Star Cruises now, well, they have brought in quite famous private equity firm, Apollo as a co-investor for Norweigian cruise line(NCL). Hopefully, the PE firm will help them streamline NCL activities and hopefully turn it around. As PE firm exit strategy is to do IPO, perhaps we may have another Genting vehicle being listed next time. As for the rest of Star Cruises, I believe the fundamentals is still bad. Buying Star Cruise is a bad call by LKT. Perhaps, his ideas is too forward for our generation? haha..or a more valid one is that he is a pale shadow of his father.



A legal gambling business is actually not as profitable as most people think it is. Genting is so profitable because it is a monopoly. A lot of casinos in Macau apart from the big 3 (Wynn, SJM and LVS) loss a lot of money during the previos FY. This is due to the fact that a legal casino have a lot of overheads cost. Just imagine the cost of setting up those entertainment and other activities that are not profitable to attract people to gamble at their casino. All these attractions forms a huge chunk of their operating cost and is usually not profitable activities. So, legal casino is not that profitable in an ultra-competitive environment.

This post has been edited by the snowball: Jun 2 2010, 11:18 PM

Genting Malaysia to buy Genting Singapore UK operation. News here :http://www.btimes.com.my/articles/20100701183315/Article/ . What a big rip -off of GENM shareholders! I feel sad for anyone that is holding GENM right now. Says good bye to your cash hoard and acquisition opportunities. Genting management basically want to unlock Genting Singapore value, so, GENM have to take this money-losing business.

That's the reason why I said owning Genting is better than GENM if you really want to own something manage by LKT. Coz Genting corporate governance risk is lower as it is more directly related to the Lim family. Regardless of what, this is second time in as many years that GENM cash hoard is wrongly utilized.

Well the value of GENS will be unlocked since they are no more write-downs. This may also indicate that the Singapore operations is going extremely well that they want to do the deal fast to bring it off their books. Today is first of July, so, the 2nd Quarter just closes. This will make GENS carry another quarter of GEN UK result on its books. I think it is on purpose they announce today so that GENS have a clear 3rd Q without GEN Uk dragging them down. Doing it on 1st July also means the GENM side do not need to carry the deal on its books for 2nd Quarter. So, in the event that GEN UK result really bad, some GENM may not have notice that if they don't pay attention to GENS announcement. So, this will give the shareholders time to cool down and don't get that angry.

All these corporate move I think have been planned ahead all this while. GENS just take a huge impairment on GEN UK asset on 1Q, probably preparing for disposal to GENM. Then, GENS somehow issues a big chunk of share options of GENS to LKT and the gang for successful opening of the Singapore operation. In fact, the Singapore operation is just a few months old, how you judge it is successful when, at the time of the option approval, Marina Bay Sands has just opened at most for a few weeks? They are basically rushing out the options so that they can make it in time before the disposal is made so that they will make money from these options when GENS price explode.

This bags a question. Where on earth is GENM independent directors? What they are doing? Most laughable is GENM COO statement :"The acquisition
of Genting UK presents GENM with an opportunity to grow, with the resources at our disposal. This acquisition will also provide us with access to established casino brands and an extensivenetwork of casinos already operating across the UK. The acquisition of Genting UK presents GENM with an opportunity to grow, with the resources at our disposal.This acquisition will also provide us with access to established casino brands and an extensive network of casinos already operating across the UK. With our proven track record and decades of experience, we have the expertise to unlock the potential of Genting UK and grow the UK business.’’ Mr COO, I thought Genting is always run as adik-beradik company, as in you share your management talent around. So, how come by changing hands from GENS to GENM, GEN UK can suddenly be a good business? If your management skill is so good, why don't LKT faster tell you to go GENS to turn GEN UK around?

For question on buying GENS,I personally prefer Genting Bhd as it is the cheaper play on GENS, but, this news will be treated as neutral i guess at Genting Bhd level. But, GENS may increase with analyst re-rating. Rational market will see Genting Bhd to increase when GENS increase, but, as we can see previously, even though GENS increase a lot, Genting Bhd increase by a bit only. So, GENS will be a more direct play.

But, I would not touch Genting Bhd at current price level because the management will rip you off anytime, so, you need a margin of safety. GENS is also expensive on the fundamental side. But, market is irrational. I won't touch both of them at this level.

BTW, I own Genting Bhd shares, so, my view may be bias. Do take it with a pinch of salt.

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Added on July 1, 2010, 11:54 pmJust write a post on my blog about this acquisition. Feel free to read if you are interested: http://goodstockbadstock.blogspot.com/2010...d-it-again.html



This post has been edited by the snowball: Jul 1 2010, 11:56 PM

You are thinking on a Genting Group basis. But, GENM shareholders do not buy into GENM so that their cash hoard can use to subsidize their sisters company. They expect it to use for acquisition. The management have been talking about expansion into Vegas and Macau for years? Where are the acquistion? A listed company should be run as seperate legal entities, eventhough it is part of a group. It is just poor execution from Genting as usual.

There are sufficient resource to go around. Basically, GENM is in autopilot. You don't need a genius to run a monopoly. The best talent should go to turning around the company most troubled operations. That's what great companies are doing, they put their best guy into bad businesses to gain experience and groom them for future leadership position.

The resources is more than sufficient. GENS CFO is actually from GENM due to internal reshuffle earlier in the year. In a conglomorate, management talent is usually shuffle around between different companies.

As for huge taxes, you don't get tax when you are losing money. GEN UK is making negligable sum on EBITDA basis so, net profit wise, there probably lose a lot of money as it is rather capital intensive with all this casinos. UK operation is a bad luck and bad call. They buy in big time into UK expecting a legaslative change to allow Vegas-style super casino in UK. Then, the sentiment in the country changes and the legislative change is put on ice. All the premium that GENS previously paid for its UK operations are for this legislative changes, the changes do not take place, so they lose money. I do not expect any changes to the casino legislation soon as UK now has a coalition goverment of Conservatives and Liberal Democrats in place. So, it is hard to pass tough legislation. Plus, UK is implementing austerity measure in the most recently announced budget, it will means slower growth.

Yup A lot of people buy into stock analyst spin about the cash per share in GENM. In fact, in a business that is badly managed, the cash per share is not a good metrics to use. Investors need to discount the cash per share figure. I hope Uncle Lim can rest in peace. If you compare LKT with Francis Yeoh, both second generation of the family group, LKT really lose by a mile.

Haha..even the voucher sometimes also not worth it liao. Genting hotels sometimes RM30 per night also can get.

Are there any law that require an EGM for acquisition at certain % of NAV? I think they have one but not sure which country liao. The majority shareholders can vote in such an acquisition if I am not mistaken. If not, the minority shareholders can bully the majority shareholders.

Thank cherroy for the info. Any IOI Prop shareholders? Maybe can shed some light during IOI Corp acquisition of IOI Prop. It is a related-party transaction also right?

Yup. FF owns around 40% of GENM free float. So many times of kena screw by Genting management, I think they just got tired and walk off the company.

Ruztynail, I have attributed GEN UK failure in my previous post as a bad call and bad luck . Yes, there are smoking ban and all that. But, the reason they buy big into UK is that they anticipate the legislation changes in UK to allow vegas style super-casino. Have they done enough analysis to determine the probability that UK legislation won't go through? Or they are too eager to expand quickly? They should have take into account the gaming taxes when going into the country. Taxes is one of the key component that will make or break an acquisition, I am sure they have price in into the acquisition price. The management can always blame other issues when an acquisition do not perform well. If not, what they can do?Admit they are wrong? That's why I hate acquisition, it is more likely to fail than succeed regardless of whether it is related party or not.

I am not saying that GENM management is sitting back. I am saying that they have no clue how to turn this mess around but still try to assure to the shareholders that they have the ability and experience to turn it around. The fact is that the only experience they have is running a monopoly in Asia but this casino is in Europe. Genting itself have no good record when doing overseas mega acquisition. So, that's make the minority investors unhappy. Because, if you have no ability to find good projects, you may as well return the cash to the shareholders not embarking on empire building and cash hoarding. The fact that I don't run a big company or don't deal with them personally does not mean that I cannot criticize them. It is like saying I can't criticize Najib because I don't work with him and I have not been a PM. I can look at the management track record to determine whether this LKT and the gang are good manager.

The key contention here is GENM treatment of its shareholders. GENM is not a division that the the Genting group have 100% ownership, so, when the management make decision on GENM, they have to consider the interest of GENM, not the interest of a group. In this case, it is clearly a decision make in the interest of a group. Obviously, Genting Group benefit from this deal, but, the minority shareholders in GENM suffers. The management promises acquisition to expand it reach, so, the some investors buy into the management talk. But, now, they turn around and buy GEN UK. It is not the type of acquisition that the minority shareholders expected.

What I hope now is that GENM sell some of its GENUK stake to some private equity, like what they have done for NCL. Let those private equity guys turn this mess around, because the GENM management have no clue how to deal with this mess.

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Added on July 3, 2010, 4:09 pmBoth suggestion are good. But too bad that Genting or GENM don't have enough resources to buy over GENS. It is too expensive for them. Plus the current structure allows these subsidiaries to be properly valued and more importantly, for Lim Family to control these businesses without putting in too much cash.

This post has been edited by the snowball: Jul 3 2010, 04:09 PM

I think they will get rid of it if they have a chance. But, the current operating environment in UK is so harsh that no one is willing to give them a fair bid. Or perhaps UK govt may finally legalize super casinos to cover their budget deficit. As you said, the top bracket gaming tax is 50%, so, if the UK govt can create at least an additional GBP 2b dollar gaming industry, they can get extra GBP 1b in tax. If it really turn out that way, then, it has a good ending. So, the only reason for GENM to justify this acquisition is that they are holding an option of UK finally legalizing super casinos, if the option turn out that way, then, it is a great deal for GENM. I am not sure whether the current coalition government can make such a decision.

But, if situation remains the same, Gen Uk may be profitable when the economic situation get better and their strategy of closing down more casinos starts to bear food. There are signs that closing down unprofitable casino is doing good for their bottom line. But the profitability generated when economy recover will still be negligable. Hopefully, the casino complex GEN UK is building in Birmingham turn out well. Then, at least those shareholders in GENM can have some returns on their investment.

For WDG, I have to admit that I do not follow it that closely. But, I guess, even they manage to turn it around, the improvement will not justify the initial investment GENM pay when taking it over from the Lim family arm.

So, i think GEN UK is currently a bad deal, but, with an option to turn out well. WDG is a bad deal.

But, I think the decision to buy over GEN Uk is to mainly unlock the value of GENS. Cz the Genting group will still hold this option regardless of whether GENUK is in GENS or GENM hands. But, GENM can justify this acquisition that they do not buy the GEN UK for its current state of operation, but, also for an option of to build UK super casinos in view of worsening budget deficit in the UK govt.

This post has been edited by the snowball: Jul 3 2010, 08:04 PM

Actually, GENM is a more profitable company than Genting Bhd pre-Genting Singapore because without GENS, Genting is just a collection of a 50% interest in a super profitable casino (genm) plus some good power and plantation business. In that sense, GENM should be valued higher than Genting Bhd in absolute terms. In per share terms, I have no idea as the outstanding shares number would be different. But, with GENS, Genting profitability should exceed GENM to the tune of 80-100+%. So, logically, the valuation should only be 80-100% more expensive in market capitalization terms. But, it seems Genting is valued more than this range.

There is a reason for the lagged. The reason is the bad deployment of cash flow. There is no doubt that GENM is a fantastic cash flow generator. It is the most profitable casino property (note: not company) in the world. However, as an investor without control of a company, to do well, we need to identify company who do both 1) Generate fantastic cash flow 2) reinvest the cash flow to high ROIC venture or return the cash flow to shareholder. GENM did (1) very well. But on (2), the cash flow is used as a vehicle to subsidize unprofitable venture ( Walker Digital, Gen UK) and as an emergency piggy bank (Wisma Genting deal). So, the cash flow generated is wasted, that is not much difference from NOT generating any cash flow in the first place. So, the valuation is bad. Most investors think that this company is undervalued because they focus on (1) but not (2). LKT is good in doing (1) because the topline and bottomline in GENM do grow under his tenure at a decent pace, but, on (2) he is well..not that good.

It seems that GENS will be the vehicle of choice for the Genting Group as a whole right now as the strategy seems to be using it to bid for profitable casino projects in Asia rather than bidding on a group basis i.e. both GENM and GENS cooperating. Perhaps, the Lim family are diversifying their wealth into some more political stable country and do not want too much exposure in Malaysia. Hence, GENM may continue to play this emergency piggy bank role.

This post has been edited by the snowball: Aug 17 2010, 08:53 PM

The share buyback is probably the best use of capital that the management have done in a very very long time. Although the timing of the buy back is rather suspicious as it is just before the special EGM on GEN UK deal, it may have help to push the deal through. The 40% protest vote is shocking, both in the numbers and the way the voting is conducted. It is requested by a shareholder to be done by poll rather than show of hands, which means some influential shareholder may not be happy with the deal. The 60% who voted the deal through are mainly engage in strategic voting i.e those who hold both Genting Malaysia and Genting Singapore. Funds like Templeton and Fidelity have hands on both companies. So, they decide to sacrifice Genting Malaysia to unlock Genting Singapore value. There is nothing wrong with that as they are not the management and have no duty towards other shareholder.

Regardless of that, the share buyback is a very good use of capital because they are finding it hard to deploy their capital meaningfully.

On RW New York, as with other global expansion that they have done, I am not sure about how profitable it is going to be as it is not a full fledge casiono. Maybank come up with a research report that state the whole project will only earn a 6% return on equity, which is on the low side as GENM ROE is in the mid-teens if you strip off the cash. Their projection is done base on a higher receipt than the highest slot machine win in NY area, so it is rather aggressive and they still come up with 6% ROE. The win rate they projecting is around US$300/machine/day. In Singapore, the win rate is around US$500/machine/day,so, they are potential for increase. But, as usual, we should practice cautioned as Singapore and New York has a totally different demographic and the number that Singapore manage to rack in impressive, the highest in the world. In a more competitive market like Macau, slot win per day is only US$200/machine/day, which is lower than that of New York. Another point to note is that, there is a native American tribe that is applying for licence to operate a full fledged casino (with card games) somewhere near RW New York is situated. This piece of news is not pick up by the Malaysian press but the press in New York have been reporting it. The process is still in preliminary phase and the final location is not confirm yet, so, just hope that the final location would be further away from RW New York.

On the RW Manila side, it is doing pretty well. On a good day, it can match Genting Singapore normal takings, which is a fantastic achievement on its own. So, due to the positive news flow, the share of Genting HK have almost doubled in a matter of 10 days. So, look out for a huge revaluation gains for GENM as GEN HK is carried under available-for-sale in their books.