Apr 23, 2014

Genting Singapore AGM 22 Apr 2014

I am not going to do any analysis here but some of the main points that I noted are as follows;

1. Gaming Revenue $2.19B (down from $2.37B in 2012), Non-Gaming Revenue $0.66B (up from $0.59B in 2012), Net profit $0.71B (up from $0.68B in 2012). Dividend of $0.01/share.
Directors' remuneration + >25%

2. Building a 550-room hotel, the first in the Jurong Lake District, expected to open in mid-2015. Genting is aiming for the ''premium-mass'' or so they described at the meeting. Anyway it is basically a move to get in early in Jurong.

3. Joint venture (50/50 with a Chinese property developer) in an integrated resort on Jeju Island, South Korea, slated to be open progressively from end-2017. It will comprise of luxury hotels, a large retail mall, a theme park and other leisure and entertainment facilities. It is foreigner-only and they will target Chinese gamblers.They did not confirm how large scale it would be (tables, etc.). The management explained that it was next to impossible to obtain onshore financing in South Korea, so this investment of about US$300M+ will be majority financed by the sale of property and the rest will come internally.

(I did some digging and the Chairman of the Chinese company revealed that there will be 800 tables including 200 for high-stakes gamblers)

4. Potential gaming business opportunity in Japan. They mentioned the proposed gaming legislation in Japan and that they are already preparing for it. It was also said that if successful, this venture will be very profitable and could be about 2.5x Genting Singapore's cashflow.

5. USS is operated by Genting SP on a franchise model which is 15-years long, after which is subject to re-negotiations. I missed the part where the director mentioned about the proportion of profit-sharing with the franchisor. (10% I think, perhaps someone can enlighten me)

I am back in Singapore during the Easter break, and attended the Genting Singapore AGM on Tuesday with my parents who are shareholders. I used to be a shareholder too but divested long ago and have not kept track of this company since.

This was an interesting AGM. The hall was fully packed with shareholders and proxies, I guess maybe a few hundred or more. Most of the questions raised were about why the dividend payout was only 1 cent/share, and why did directors' remuneration increase by more than 25%. 

To justify the remuneration, they emphasized repeatedly that their directors are under more scrutiny and have more regulations to comply with that were set by the Casino Regulatory Authority. Generally, the shareholders agreed (or grudgingly) that if the management runs the company well, they are deserved to be paid well.

For many of the shareholders there who were fixated on the low dividend payout, Genting does not have a dividend policy so any payout should be considered a bonus. The management have outlined their plans for growth and expansion and these require financing and cash. The nature of their business also requires them to keep a sizeable cash hoard to capitalise on opportunities even if it is not immediate. Thus Genting should not be seen or expected to be a dividend stock, at least not until its expansion projects have matured. 

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