Genting shares fall 6pct after Q2 earnings miss expectations

Genting Bhd's share price experienced a decline of nearly six percent following its second-quarter earnings falling short of analysts' expectations. The stock dropped by 13 sen or 5.8 percent to RM2.11 per share, with trading volumes exceeding 9.38 million shares. This valuation brought the company's market worth to approximately RM8.18 billion.

Over the course of the year, Genting's shares have experienced a 29.2 percent decrease, falling from RM2.98 to their current value. Genting Malaysia Bhd, a 74 percent-owned subsidiary, witnessed a similar decline in its share price, down by three sen or 1.7 percent to RM1.70 per share. This decline followed a sharp 90 percent drop in the subsidiary's Q2 net profit, which fell to RM47.4 million from RM416.6 million in the corresponding period last year.

Despite an increase in revenue to RM7.75 billion from RM6.78 billion, Genting attributed the lower profit to foreign exchange translation losses, along with increased finance and operating costs. Analysts from Public Investment Bank Bhd noted that both Genting and Genting Malaysia's performances significantly underperformed expectations, leading the firm to revise its earnings forecasts for the financial years 2026 to 2028 (FY26-28) down by 18 percent and 11 percent respectively.

PublicInvest maintained a neutral stance on both stocks, with target prices set at RM2.35 for Genting and RM1.73 for Genting Malaysia. Analyst Eltricia Foong cited the challenging environment for the entertainment and hospitality industry, citing rising geopolitical tensions and increased operating costs as key factors. She warned that Genting's mounting debt, particularly the US$5.5 billion project cost for their New York casino expansion, would not yield earnings growth for the next one to two years.

Foong also highlighted the potential impact of changing consumer preferences, particularly the rising popularity of online gaming platforms over traditional physical casinos, which could hinder Genting Malaysia's long-term growth prospects.