Shares of Malaysian billionaire Lim Kok Thay's Genting slump to near 2-decade low

Shares of Malaysian billionaire Lim Kok Thay's Genting suffered a significant decline, plummeting to near a two-decade low. The stock plummeted as much as 17% to RM1.56 (US$0.38) in under 30 minutes of morning trading on Monday, marking the steepest drop since 1998 and erasing over RM1 billion from the group's market capitalization.

By noon, intraday short selling of Genting's shares was suspended for the remainder of the day as the stock hit its limit down. Selling pressure extended to listed subsidiary Genting Malaysia, with shares falling 13% to RM1.29.

Genting had proposed a renounceable rights issue earlier in the week to raise cash, allocating RM800 million (64%) to repay borrowings due within 12 months and RM429.5 million for working capital, operational needs, and corporate funding over the next 12 months. However, Maybank Investment Bank analyst Samuel Yin expressed concern over the rights issue, noting that it signals Genting's limited success in refinance its borrowings with longer-term debt.

Yin's scenario analysis revealed minimal interest savings, de-gearing, and considerable earnings-per-share and book value per share dilution. Maybank downgraded Genting to a non-consensus sell rating, while CIMB Securities warned of further selling pressure, citing the negative perception of rights issues among investors.

The fundraising effort comes as Genting confronts mounting debt and declining profitability. The group posted a net loss for the second quarter while its total borrowings reached RM45.3 billion as of June 30. Fitch Ratings downgraded Genting to BBB- in September, expecting a slow pace of deleveraging due to substantial capital expenditure required for expanding key properties in Singapore and New York.

Genting, operating casinos in markets including the Bahamas, Malaysia, and Singapore, has recently increased its presence in the U.S., with properties in Las Vegas and New York. The company's Resorts World is currently constructing a $5.5 billion project in New York City, with the first phase completed in April and the second phase beginning in July.

Once finished, the resort is projected to generate $2.2 billion in annual revenue. Lim, son of Genting's late founder Lim Goh Tong, oversees the group's international expansion and diversification into sectors like energy, property, and biotechnology.