Shares down 4.4 percent since vote
Genting Malaysia Bhd., which stormed the UK gaming market in October 2010 with the acquisition of 46 casinos formerly owned by sister company Genting Singapore Plc, is feeling the aftershock of the June 23 Brexit vote.
The historic referendum, in which the majority of Brits voted to leave the European Union, drove the pound down about 12 percent to a 31-year low against the dollar, reported the Wall Street Journal. That slide could continue. Nomura Holdings Inc. has forecast a 1 percent drop in earnings per share for Genting for every 10 percent decline in the pound-ringgit rate.
“Genting Malaysia’s exposure to the UK is more concentrated” than some of its peers, said Danny Wong Teck Meng, CEO of Areca Capital Sdn in Kuala Lumpur. But while he predicted “some indirect impact arising from Brexit,” he added that it will not be “a huge concern for now for the UK casinos. Slower business volume would add more pressure in the longer term.”
In 2010, the company paid ?351.5 million for the portfolio, which includes the Crockfords, Colony Club, Maxims and London Mint brands. The properties, including six casinos in London, contributed 24 percent of the group’s revenue in the quarter ending March 31, up from 16.4 percent in 2015, the Journal reported, citing financial data from the firm.
“We see a dual negative impact from the results of the Brexit vote, Nomura wrote in the report on Genting Malaysia. “A weaker economic climate will likely result in slower business volumes, and will be further hurt by a weaker pound-to-ringgit translation.”
Fearing a recession in the UK and Europe, Morgan Stanley has urged investors to avoid dollar-based notes from Asian companies with more than 15 percent of revenue linked to the UK and Europe.
Shares in Genting Malaysia dropped 4.4 percent since the June 23 referendum. “Companies exposed to the pound in their earnings may see some pressure,” said Wan Murezani Wan Mohamad, head of research at MNRB Holdings Bhd., a Kuala Lumpur-based reinsurer. “The risk to earnings skews to the downside.”
