Maybank Investment Bank Berhad
Date of Report: August 18, 2025

Genting Malaysia: Empire Resorts Deal May Unlock Value, But Upside Limited – Full Analysis & 2025 Outlook

Introduction: Positive News but a Cautious Outlook for Genting Malaysia

Genting Malaysia (GENM MK) has surprised the market with a strategic proposal from its US subsidiary, Empire Resorts. After significant investments in the loss-making Empire, a new plan to sell non-gaming assets, acquire land, cut debt, and reduce expenses could potentially boost earnings and valuation. However, with less than 10% upside including dividend yield, Maybank Investment Bank has downgraded GENM to HOLD, maintaining its sum-of-the-parts target price at MYR1.95 pending proposal completion and upcoming results.

Key Companies Covered

• Genting Malaysia (GENM MK): Malaysian-listed integrated resort and casino operator with global presence.
• Empire Resorts: Now 100%-owned US subsidiary, not listed, operator of Resorts World Catskills (RWC).
• Sullivan County Resort Facilities Local Development Corporation (SCRFLDC): NY-based not-listed entity involved in the asset transaction.
• EPR Properties (EPR US): US-listed REIT (not rated in this report).

Empire Resorts Restructuring: Asset Sale, Land Acquisition, Debt Reduction

Empire Resorts is proposing to sell its non-gaming assets, including:

• 332-room Resorts World Catskills (RWC) hotel
• 99-room Alder Hotel
• 18-hole Monster Golf Course
• 2,500-seat RWC Epicenter
• Multiple restaurants

These will be sold to SCRFLDC for USD525 million (MYR2.2 billion) in cash. Empire will then use the proceeds to:

• Purchase 1,554.6 acres of land from EPR Properties for USD201.3 million (MYR848.1 million)
• Redeem its USD300 million (MYR1.3 billion) 7.75% Senior Unsecured Notes (SUN) due November 2026

Empire will also enter into a long-term land lease and a 20+10 year management agreement with SCRFLDC to manage the non-gaming assets.

Financial Impact: Earnings and Valuation Upside

The proposal is expected to bring significant cost savings:

• Elimination of lease payments to EPR (estimated at USD10 million per year)
• Extinguishing annual interest expense on the SUN (USD23.3 million per year)

Combined, this could boost GENM’s FY26E earnings by USD33.2 million (MYR140 million), or about 24% of forecast FY26 earnings.
If the deal is completed, the sum-of-the-parts target price (SOTP-TP) could rise 15% from MYR1.95 to MYR2.25 per share, factoring in the vacant land retained and reduced debt.

GENM: SOTP Valuation Scenarios

Empire Resorts: Still Loss-Making, Discount Justified

Despite the proposal, Empire Resorts is expected to remain loss-generating. Even after accounting for the potential MYR140 million cost savings, Maybank forecasts a FY26E net loss of USD20.4 million (MYR85.9 million) for Empire. This justifies the continued 10% discount applied in the SOTP valuation.

Genting Malaysia: Key Financials and Performance Metrics

Empire Resorts: Financial Performance Snapshot

GENM: Business Overview and Strategic Priorities

• Owns and operates Resorts World Genting (RWG), Resorts World New York City (RWNYC), Genting UK, and Resorts World Bimini (RWB).
• RWG contributes about 80% of group earnings, benefiting from the Genting Integrated Tourism Plan (GITP) expansion, which includes new hotel rooms, theme parks, malls, and transportation links.
• ROE has declined to below 10% post-2013, mainly due to start-up losses at RWB and the full acquisition of Empire Resorts.
• Forecasts indicate continued net debt position, but progressive dividend payments remain a feature.

Key Growth Drivers and Risks

Upside Factors:

• Higher VIP win rates and a stronger mass-market mix can improve earnings and margins.
• Increased visitor arrivals to RWG, especially from new GITP facilities.

Downside Risks:

• Related party transactions (RPTs) that may not favor minority shareholders.
• High capex commitments for regional expansion without guaranteed returns.
• Political risks, such as potential closure of outlets in opposition-controlled states.

GENM: Share Price and Market Performance

• Share price as of report: MYR2.02
• 12-month target price: MYR1.95 (unchanged)
• 52-week high/low: MYR2.57 / MYR1.48
• Market cap: MYR12.0 billion (USD2.8 billion)
• Issued shares: 5,938 million
• Major shareholders: Genting Bhd 47.1%, Genting Malaysia Bhd 4.6%, AIA Bhd 1.9%

GENM: Key Ratios and Financial Metrics

Summary: Strategic Steps, But Wait for Execution

• GENM’s restructuring of Empire Resorts could unlock material cost savings and improve group earnings and valuation.
• Despite the positive proposal, Empire is still expected to be loss-making through at least FY26.
• GENM’s target price remains at MYR1.95, with potential upside to MYR2.25 pending deal completion and future results.
• With less than 10% total return (including dividends), the stock is rated HOLD.

Investment Ratings Definition

• BUY: Expected return above 10% in the next 12 months (including dividends).
• HOLD: Expected return between 0% and 10% in the next 12 months (including dividends).
• SELL: Expected return below 0% in the next 12 months (including dividends).

Conclusion

GENM’s latest move with Empire Resorts is a notable strategic attempt to arrest losses and generate value from underperforming assets. Investors should watch for the completion of the asset sale, debt reduction, and upcoming quarterly results, all of which will determine whether the forecasted benefits are realized in earnings and share price.
For now, with the valuation capped and fundamental risks persisting, a HOLD rating is warranted as the group navigates this transitional phase.