Genting's RM1.25bil rights issue to cut debt, but earnings dilution looms

KUALA LUMPUR: Genting Bhd's RM1.25 billion rights issue aims to reduce debt and lower financing costs, but concerns over potential earnings dilution and an uncertain outlook remain, according to PublicInvest. Eight-six percent of the funds raised will be used to repay debt, while the remaining portion will support working capital and cover issue-related expenses.

The rights issue is slated for completion in the first quarter of the fiscal year 2027. Major shareholders, holding a 45.1% stake, are expected to subscribe to their full entitlement. Genting anticipates annual interest savings of RM41.3 million post-repayment. The rights shares will be issued at a 25-30% discount to the five-day volume-weighted average price, and the entitlement ratio is yet to be determined.

PublicInvest maintains a neutral rating on Genting, citing limited earnings visibility, and has set a target price of RM2 after accounting for a 15% holding company discount. The earnings per share are estimated to be diluted by 16% and 17% for fiscal years 27 and 28, respectively, while dividend per share could fall by approximately 20%.