The Three Numbers That Service Genting Malaysia

Tucked under the wings of Genting Berhad (KLSE: 3182.KL; KLSE: GENTING) is Genting Malaysia Berhad (KLSE: 4715.KL; KLSE: GENM). It is the leisure and hospitality arm of the Malaysian conglomerate.

Genting Malaysia’s interests include theme parks, hotels and gaming in Malaysia. It also operates casinos in the US and the UK.

Over the last five years, Genting Malaysia has delivered a respectable, though not spectacular, return on equity. In 2015, its RoE was 7.3%. This implies that the company generated MYR7.30 on every 100 ringgit of shareholder equity invested in the business.

The main contributor of the Return on Equity was the high Net Income Margin. At 14.9%, it suggests that Genting Malaysia made MYR14.90 on every MYR100 of sales. That is slightly lower than the 20% margin that Malaysia’s top 30 companies made last year.

However it is higher than its sister company in Singapore. Genting Singapore (SGX: G13) reported a Net Income Margin of 8.0%.

Genting Malaysia is quite efficient in the use of assets. Its Asset Turnover of 0.34 implies that it generated revenues of MYR34 on every MYR100 of assets at its disposal. That is on par with the 30 companies that make up the FTSE Bursa Malaysia KLCI (KLSE: ^KLSE).

The company makes use of debt. It had Total Liabilities of MYR7.9 billion and Total Assets of MYR25.9, which equates to a Leverage Ratio of 1.44. That is lower than the market average.

By splitting the Return on Equity for Genting Malaysia, it is easy to see how shareholders have been serviced. Its RoE of 7.3% is the product of a high Net Income Margin of 14.9%; a decent Asset Turnover of 0.34 and a measure of Leverage Ratio of 1.44.

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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 Director David Kuo doesn’t own shares in any companies mentioned.