GEN Bhd downgraded by Maybank as casino group flags US$306mln rights issuance

Global casino operator and plantations business Malaysia’s Genting Bhd is proposing a renounceable rights issue of new ordinary shares in the group to raise gross proceeds of approximately MYR1.25 billion (US$306.1 million), according to a Friday filing to Bursa Malaysia. The group said the issue price of the rights shares, entitlement basis and entitlement date “will only be determined and announced by the board… closer to the implementation” period in order to provide the board with flexibility. Maybank Investment Bank Bhd stated in a Sunday memo it had decided to “downgrade to ‘sell’” the casino group’s stock, “with a lower target price to MYR1.49” per unit. Genting said MYR800 million of the rights issuance would be used for repayment of borrowings within 12 months of issuance; and MYR429.5 million would go for working capital within the same time frame. A balance of MYR20.5 million would cover expenses from the rights issue. Maybank analyst Samuel Yin Shao Yang wrote in the Sunday note that his institution’s “scenario analysis reveals not only minimal interest savings and de-gearing” from the proposed rights issuance, “but also marked earnings per share and book value per share dilution”. He added: “We also cannot rule out more equity fundraising efforts or fewer dividends.” Per Friday’s announcement, as of June 30, Genting Bhd and its subsidiaries had total borrowings of just over MYR45.25 billion. That consisted of short-term borrowings of nearly MYR9.68 billion, and long-term borrowings of almost MYR35.58 billion. The statement said interest on the borrowings ranged from 3.88 percent up to 8.45 percent per annum. In early September, credit institution Fitch Ratings had downgraded Genting Bhd, saying substantial capital expenditure in Singapore, New York had slowed deleveraging efforts. Also that month, S&P Global Ratings said Genting Bhd had “no more buffer” for further earnings disappointment, with elevated spending and weak operating results keeping the group at risk of losing its investment-grade rating. Genting Bhd is the parent of Genting Singapore Ltd, which runs the Resorts World Sentosa casino complex in Singapore. Genting Bhd is also the parent of Genting Malaysia Bhd, which runs that country’s only licensed casino complex, Resorts World Genting. Genting Malaysia also operates casinos in the United States, the Bahamas, the United Kingdom, and Egypt. In its Friday update on the planned rights issue, Genting Bhd stated: “For Malaysia, regional and domestic tourism are expected to remain under pressure as higher airfares and travel-related fuel costs continue to weigh on consumer travel decisions.” But the parent added that Genting Malaysia and its subsidiaries were “focused on operational discipline and yield management to optimise performance and manage costs, whilst continuing to enhance Resort World Genting’s integrated resort offerings to drive visitation and customer engagement.” In the U.K. and Egypt, the Genting Malaysia unit “continues to focus on customer proposition enhancements, operational efficiencies and prudent cost management to support business performance.” Upgrade and expansion of facilities at Resorts World Sentosa in Singapore “are intended to broaden the resort’s customer proposition, increase guest engagement and spending, encourage repeat visitation and generate greater operational efficiency as the upgraded assets progressively stabilise,” the parent stated. The update observed that the overall group was also progressing the phased development of Resorts World New York City (RWNYC) in the United States, “as an earnings growth initiative”. Friday’s statement added: “Following the loss attributable to equity holders of the company of approximately MYR11.6 million in financial year ended 31 December 2025, the Genting group remains focused on strengthening its financial position through capital management efforts and targeted allocation of financial resources. “The group intends to balance the funding requirements of its existing operations and committed investments with efforts to pare down existing debt.”