Is Genting Hong Kong Limited A Share Worth Looking At?


The Genting Group is a multi-billion conglomerate. Based in Malaysia, the group is involved with property development, commodities, and most importantly, leisure and hospitality (i.e. resorts and casinos!).

In Singapore alone, the Genting Group has two listed entities, namely Genting Singapore PLC (SGX: G13) and Genting Hong Kong Limited (Malaysia) (SGX: S21).

It’s not unreasonable to think that Genting Singapore would be familiar with local investors as it owns and operates Resorts World Sentosa, one of Singapore’s tourism and leisure highlights. In addition, the company’s also part of Singapore’s share market benchmark, the Straits Times Index (SGX: ^STI).

Genting Hong Kong on the other hand, would likely receive a much lower level of interest as its business activities are just not as consumer-facing and prominent as that of Genting Singapore. But, that does not necessarily mean that Genting Hong Kong is a lousier share than Genting Singapore.

What’s behind the scenes

Genting Hong Kong’s main operating business is Star Cruises, a cruise line which offers gaming activities onboard. For those who visit the Harbour Front area of Singapore frequently, Star Cruises’ ships can often be found anchored at the harbour there. In fact, this year marks the 21st anniversary of Star Cruises’ operations. The longevity of the business itself might be a prompt for investors to dig deeper.

Apart from running the seven vessels under the Star Cruises brand, Genting Hong Kong also has interests in Norwegian Cruise Line and Resorts World Manila. The latter, which is located in the Philippines, is a similar kind of establishment to Resorts World Sentosa.

In 2013, Genting Hong Kong reaped significant gains after selling off a portion of its stakes in Norwegian Cruise Line and Resorts World Manila; both operations became publicly-listed companies in that year. Genting Hong Kong ended up recording a total gain of US$671 million from the sale of shares in both operations. That helped drive Genting Hong Kong’s total profit in 2013 to a 200% increase to US$552 million.

There are two important things to note with the partial sale of Genting Hong Kong’s stakes in Norwegian Cruise Line and Resorts World Manila.

A catalyst for improvement

With the partial sales, the first thing to note is that Genting Hong Kong’s balance sheet has improved tremendously. In 2012, the company had US$392 million more debt than cash; in 2013, the situation reversed with it carrying US$189 million more cash than debt.

Given a stronger balance sheet, the company might be more aggressive in pursuing its other growth strategies. On that front, the company had already announced in late 2013 and early this year that it will be taking delivery of two more cruise ships that will serve cruise clients in Asia. The company is also going into the hotel business in China under the brand of Genting Star.

The second thing to note is that Genting Hong Kong still has stakes in Norwegian Cruise Line and Resorts World Manila. Those two associate companies are still growing. In fact, Resorts World Manila is still far from reaching its full potential; many more new hotels and attractions are currently under construction in the resort.

Foolish Summary

Although Genting Hong Kong is a much smaller company compared to Genting Singapore currently – the two companies clocked revenue of S$700 million and S$3.0 billion, respectively, in the last 12 months – it offers something different for investors and is not a company to be disregarded easily.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn't own any companies mentioned above.