Genting Group should hive off non-core assets, regroup and relaunch

KUALA LUMPUR Jan 31 - Every Malaysian would have gone up the highlands of Genting Highlands at one point of their lives.

To escape the searing heat, every city or rural folk would dash up the highlands to seek refuge from the sun and indulge in a multitude of leisure and entertainment offered by the various tourism attractions situated at the range.

But just like any other companies around the world, Genting Group is equally a victim of the pandemic and today it's survival is at a limbo.

For the past two years, the group had announced several retrenchments for its workers as tourists no longer throng its hotels and amusement parks obviously due to the on-going pandemic.

Last week, Genting Hong Kong, filed its petition in Bermuda to wind up the company and appoint provisional liquidators.

It said its cash was expected to run out around the end of January and it had no access to further funding.

"Genting Hong Kong is not the same with Genting Singapore, Genting Malaysia and Genting Bhd.

They all have different businesses and assets," an analyst at Maybank Securities told DagangNews.com.

Thus, he said there is a need for the diversified group to dispose non-core assets which are not doing well while keeping businesses which still have the potential to do well during and after the pandemic.

"For example, Genting Highlands is slowly picking up as the pandemic is headed for it's tail end.

Genting Hong Kong meanwhile is obviously not doing well as there are no tourists going on a sea cruise right now.

So it makes sense for the Genting group to dispose Genting Hong Kong," said the analyst.

"If your business is not doing well, cut your losses and regroup," said the analyst.

He added prospects for the group is good as the virus is weakening and once COVID-19 is over, it's hotels, leisure and entertainment sector will bustle once again.

"But that is some time away, so in the meantime, maybe Genting should find new business to sustain just like its Genting Plantations which has cushioned the blow of the pandemic."

Meanwhile a fund manager at Permodalan Nasional Bhd said the Genting Group should let go Genting Hong Kong for good once and for all.

"The company should not keep Genting Hong Kong and let it just sit there eating cash" he told DagangNews.com.

On the inability of Genting Hong Kong to repay its debt, the company would not be severely impacted if the loan is secured.

"If the loan is secured and guaranteed by Genting Malaysia, hopefully the debt owed by Genting Hong Kong will be a one-time hit on its books only and maybe become just a sneeze," said the analyst.

Genting Hong Kong has been bleeding ever since the pandemic broke out in 2020 and its debt is said to be at about UD$3.5 billion.

It's a hard bullet to bite right now but Genting Group has to hive off the bleeding Genting Hong King business which is almost worthless now.

Every kid in Malaysia has fond memories of Genting Highlands watching for the first-time warm vapour coming out from their mouths and nostrils as they breathe in the cold Genting Highlands air.

Genting Group can etch these memories in stone by restructuring, regrouping and relaunch into a stronger conglomerate. - DagangNews.com