SWOT ANALYSIS SStrengths: inside matters For our groups survey and research on Genting Group ,we found that the strengths of it is that Genting Group is Malaysias leading multinational corporation corporation and one of Asias best-managed companies. They have over 27,000 employees, 11,000 11,000 acres of prime resort land and more than 80,000 hectares of plantation land. The Genting Group is the collective name for Genting Berhad and its subsidiaries, which comprise the following three listed entities, with a combined market capitalisation of about RM47 billion (US$14 billion). (*as at 30 September 2008) The Genting Group was founded in 1965 by the late Tan Sri (Dr.) Lim Goh Tong with the development of a beautiful highlands resort, named Genting Highlands Resort. Located at 2,000 metres above sea level and 58 kilometres ki lometres from Kuala Lumpur in Malaysia, Genting Highlands Resort is now one of the worlds leading integrated entertainment resorts, resorts, attracting 19.6 million visitors in 2007 (see History for further details). Under the leadership of Tan Sri Lim Kok Thay, the Genting Group continues to grow from strength to strength. His commitment to excellence, innovation and growth has resulted in the birth of premier global brand names. Genting Berhad is the investment holding and management company of the Genting Group. The principle activities of the Group are leisure & hospitality, power generation, oil palm plantation, property development and oil & gas. The Group is committed to continue to grow strongly as a leading Asian multinational corporation.
WWeaknesses: inside matters Genting broke its uptrend line .Genting reported its results for 1Q2008 ending 31/3/2008 on May 29th. The net profit declined 14.6% q-o-q or 33.1% y-o-y to RM439.4 million. Turnover of
RM2.164 billion was 6.6% higher than the same quarter last year, but 3.8% lower than the immediately preceding quarter. The 33.1%-drop in net profit, when compared to the same quarter last year, was attributable to one-off gain recorded previously, such as the RM510.7 million net gain arising from the dilution of its shareholdings in Resorts World and Genting I nternational PLC as well as a gain on dilution of RM63.2 million arising from Resorts World's investment in Star Cruises. The 14.6%-drop in net profit, when compared to the immediately preceding quarter, was attributable to lower profits from the Leisure & Hospitality Division (due to lower visitors arrival in Genting Highlands Resort & its UK casinos) as well as the Plantation Division (due to lower FFB production). Genting expects its results for the rest of its current financial year to be satisfactory due to anticipated increase in visitors to Genting Highlands Resort (in line with the Visit Malaysia Year promotion) as well as positive contribution from its Plantation Division. In its opinion, these should offset any negative impact from its Power Division (due to higher fuel prices) & continued weakness in its UK casino operation. Technically speaking, Genting has broken below its immediate uptrend line support of RM6.15 about 4 weeks ago. The next supports are at RM5.20 & RM4.50 .
OOpportunities: outside matters Genting foresaw the opportunities for the Singapore casino and Genting wins bid for Singapore casino .For the information ,shares of Genting, the biggest casino operator in Asia by market value, recorded their biggest jump in at least 19 years Monday after the company won a bid to build a $3.4 billion resort in Singapore. Genting shares jumped 2.75 ringgit, or 9.4 percent, to 32 ringgit on the Kuala Lumpur stock exchange, the biggest increase since Jan. 14, 2000. Genting also owns Star Cruises, the largest Asian cruise line and a partner in the Sentosa bid, and Genting Highlands, a cluster of hotels around casinos on a mountain top near the Malaysian capital. Shares of Star Cruises rose as much as 53 percent in Hong Kong. The
winning bid prompted banks to increase target prices for Genting stock. Credit Suisse Group lifted its target to 37.25 ringgit from 28.5 ringgit. UBS raised its price forecast to 34.2 ringgit from 29.7 ringgit. Genting expects the resort to generate 15 billion Singapore dollars a year in tourism spending, and plans to spend 200 million dollars a year to rejuvenate the project over 30 years. The company has said the casino could generate as much as $2 billion in gambling revenue in the first year. Lim is betting the Singapore project will help the company leapfrog Harrah's Entertainment and Wynn Resorts to become the world's third-largest gaming-operator by market value.
TThreats: outside matters After we doing the research, the threat that Genting facing is intermediate financial risk. Genting maintains a conservative capital structure and a consistent healthy financial profile, due to its strong cash flow generation. Coupled with a measured approach toward acquisitive growth, Genting's funds from operations (FFO) to debt averaged 64% in the past three years, which compares favourably against industry peers. With the proportionate consolidation of financially weaker associate, Star Cruises, cash flow measures, while low, remained adequate, with three-year average FFO to debt at 32.4% and EBITDA interest cover at 10x.
Beside that ,single-site risk of gaming business also one of the threat. Genting's gaming operations are exposed to single-site risk, as most of its facilities are located at Genting Highlands in Malaysia. The country's largely Muslim population imposes added risk to regulatory environment, although such risk has been lessened with the more moderate National Front Coalition in power. Nonetheless, Genting has diversified over the years from its single-site operation through acquisition of gaming business in the UK and is bidding in one of the two integrated resorts to be constructed in Singapore.
In the other hand ,Genting also faces increasing competitive threats from an expanding gaming market in the region, e.g., Macau and Singapore. If Genting fails to win a bid for the Singapore integrated resort, it could present a potential threat to the group as Genting may lose patrons from Singapore and some in Johor, Malaysia. Nevertheless, Genting derives most of its revenue from the steady grind market at home, which is more resistant to competition.
