Maybank Investment Bank Berhad
Date of Report: August 18, 2025
Genting Malaysia: Empire Resorts Asset Sale Could Boost Earnings, But Upside Limited
Executive Summary: Genting Malaysia’s Strategic Moves at Empire Resorts
Genting Malaysia (GENM MK) has taken decisive steps to address the persistent losses at its wholly owned US subsidiary, Empire Resorts. After investing over MYR3.3 billion, positive news has emerged: Empire plans to sell its non-gaming assets, acquire land, reduce debt, and trim expenses. While these moves could significantly lift earnings and valuation, the limited upside prompts a downgrade to HOLD, with the SOTP-based target price maintained at MYR1.95.
Key Highlights and Report Overview
- Empire Resorts plans to sell non-gaming assets for USD525 million.
- Proceeds will be used to acquire land, redeem debt, and cut operational costs.
- Potential boost to Genting Malaysia’s FY26E earnings by 24% and SOTP-TP by 15%.
- Target price remains at MYR1.95 pending deal completion and 2Q25 results.
- Downgrade to HOLD as the total return (including dividends) is less than 10%.
Empire Resorts: Asset Sale, Debt Reduction, and Operational Impact
Empire Resorts, a 100%-owned subsidiary of Genting Malaysia, has struggled with losses despite significant capital injections. The latest proposal includes:
- Selling non-gaming assets (the Resorts World Catskills hotel, Alder Hotel, Monster Golf Course, Epicenter, and several restaurants) to Sullivan County Resort Facilities Local Development Corporation (SCRFLDC) for USD525 million (MYR2.2 billion).
- Using proceeds to buy 1,554.6 acres of land from EPR Properties for USD201.3 million (MYR848.1 million).
- Redeeming USD300 million (MYR1.3 billion) of 7.75% Senior Unsecured Notes due November 2026.
Empire will also enter a land lease with SCRFLDC until 2066 and a 20+10-year management contract to operate the non-gaming assets, with terms yet to be finalized.
Projected Earnings and Target Price Upside
These measures are expected to deliver meaningful cost savings:
- Ceasing lease payments to EPR (estimated at USD10 million per annum).
- Eliminating interest payments on the redeemed notes (USD23.3 million per annum).
- Combined, these savings could boost Genting Malaysia’s FY26E earnings by MYR140 million (24%).
Moreover, even after the transaction, Empire will own 1,134.6 acres of vacant land, which could be developed further. If the land’s value is adjusted for the vacant portion, and net debt is reduced accordingly, the SOTP-TP could rise by 30 sen/share (15%) to MYR2.25.
Genting Malaysia: Financial Overview and Valuation
| FYE Dec (MYR m) |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue |
10,189 |
10,912 |
11,827 |
12,622 |
12,783 |
| EBITDA |
2,810 |
2,797 |
3,014 |
3,128 |
3,173 |
| Core net profit |
584 |
519 |
531 |
579 |
666 |
| Core EPS (sen) |
10.3 |
9.2 |
9.4 |
10.2 |
11.7 |
| Net DPS (sen) |
15.0 |
10.0 |
8.0 |
9.0 |
10.0 |
| Core P/E (x) |
26.1 |
24.7 |
21.6 |
19.8 |
17.2 |
| Net dividend yield (%) |
5.6 |
4.4 |
4.0 |
4.5 |
5.0 |
SOTP-Based Valuation Scenarios
| Asset |
Value (MYRm) |
Value/share (MYR) |
Comments |
| Resorts World Genting |
14,260.5 |
2.52 |
WACC: 13.0%, g: 2% |
| Resorts World New York City |
3,311.6 |
0.58 |
40-year SOTP @ 13.0% |
| Resorts World Bimini |
– |
– |
Nil |
| Genting UK |
746.3 |
0.13 |
WACC: 13.0%, g: 0% |
| Other investment securities |
513.4 |
0.09 |
Cost |
| Malaysian property |
462.3 |
0.08 |
Cost |
| Miami property |
2,018.1 |
0.36 |
Cost |
| Empire Resorts |
– |
– |
Nil |
| Net debt ex-finance lease liabilities |
(9,053.5) |
(1.60) |
End-FY25E ex-lease liabilities |
| (10% discount) |
(1,225.9) |
(0.22) |
|
| Equity value |
11,032.8 |
1.95 |
|
If the Empire Resorts proposal is completed, Empire’s vacant land would be valued at MYR619 million (0.11/share), net debt would fall, and equity value would increase to MYR12,727.4 million (MYR2.25/share).
Empire Resorts: Financial Performance Snapshot
| USD million |
FY20A |
FY21A |
FY22A |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Revenue |
96.9 |
231.0 |
262.9 |
278.8 |
282.3 |
278.8 |
278.8 |
278.8 |
| EBITDA |
(31.6) |
36.0 |
34.4 |
19.5 |
27.0 |
30.7 |
30.7 |
30.7 |
| Pre-tax profit |
(151.1) |
(76.6) |
(56.1) |
(64.8) |
(57.0) |
(53.6) |
(53.6) |
(53.6) |
| Net profit |
(151.3) |
(67.6) |
(43.7) |
(58.0) |
(55.2) |
(53.6) |
(53.6) |
(53.6) |
Despite the measures, Empire is still forecasted to generate a net loss of USD20.4 million (MYR85.9 million) in FY26E after cost savings, justifying the continued 10% SOTP discount.
Genting Malaysia’s Business Profile: Strengths and Strategic Outlook
- Owns and operates Resorts World Genting (RWG), Genting UK, Resorts World New York City (RWNYC), and Resorts World Bimini.
- RWG contributes ~80% of group earnings and is expanding under the Genting Integrated Tourism Plan (GITP), adding hotel rooms, theme parks, malls, and more.
- ROEs have fallen below 10% post-2013 due to start-up losses, especially at RWB and now Empire.
- Balance sheet likely to remain in net debt due to progressive dividend payments.
Growth Drivers and Risks
Upside Potential:
- Higher VIP win rates and a shift towards mass market could expand margins
- Increased high-margin mass market visitation to RWG
Downside Risks:
- Related party transactions that may not favor minority shareholders
- Heavy capex commitments in new markets without guaranteed returns
- Political risks, especially closure of NFO outlets in opposition-controlled states
Company Profile & Share Performance
| Company |
Share Price (MYR) |
12m Target Price (MYR) |
Market Cap (MYR bn) |
52w High/Low (MYR) |
Dividend Yield (%) |
Major Shareholders |
| Genting Malaysia |
2.02 |
1.95 |
12.0 |
2.57 / 1.48 |
5.6 |
Genting Bhd. (47.1%)
Genting Malaysia Bhd. (4.6%)
AIA Bhd. (1.9%) |
Conclusion: Maintain HOLD on Genting Malaysia Amidst Uncertainty
The proposed asset sale, debt reduction, and operational savings at Empire Resorts mark a significant positive step for Genting Malaysia. However, with less than 10% upside including dividends and lingering uncertainty until the deal’s completion and 2Q25 results, the recommendation shifts to HOLD. Investors should monitor execution risks and await further clarity on the group’s financial turnaround and growth trajectory.
Other companies referenced:
- Empire Resorts (Not Listed)
- Sullivan County Resort Facilities Local Development Corporation (SCRFLDC, Not Listed)
- EPR Properties (EPR US, USD53.03, Not Rated)
Report prepared by Maybank Investment Bank Berhad, August 18, 2025.
