This research proposal studies on the financial performance of Genting Group. In this proposal it explains on how the Genting Group expands their business and maximize the group profit.
2. Objectives:
* To investigate what is the factor of Genting Group involve into the international business.
* To find out the way of how Genting Group expands their business to the international and maximize the profit.
* To investigate what is the international market size in casino industry for Genting Group.
3. Research Question:
* Is there any other competitor in the same line with Genting Group?
* How Genting Group competes with other foreign company when they expand their business in other country.
4. Introduction
Genting Group is a subsidiary and affiliates operating under the 'Genting' name and is recognize as one of the Asia's leading and best manage multinationals company. There are currently 5 public companies and 3 jurisdictions in the group which is also operate under the name of 'Genting' with a combined market capitalization of over RM131 Billion (US$41 billion) as at 30 November 2010 (Genting Group, 2010).
The 5 public companies in the Genting Group which is including Genting Berhad, Genting Malaysia Berhad, Genting Plantations Berhad, Genting Singapore PLC, which is also the subsidiary company and Genting Hong Kong Limited is an affiliates company (Genting Group, 2010).
These public companies and their subsidiaries and affiliates are involved in various businesses, including leisure & hospitality, power generation, oil palm plantation, property development, biotechnology and oil & gas. Collectively, they have over 58,000 employees, 4,500 hectares of prime resort land and about 133,000 hectares of plantation land. Genting's well-known consumer brands in the leisure & hospitality sector include "Resorts World", "Maxims", "Crockfords", "Awana", "Star Cruises" and "Norwegian Cruise Line" (Genting Group, 2010).
Exchange Rate: Approximate US$ = RM 3.16
Source: Genting Group Profile, 2010
(http://www.genting.com/groupprofile/index.htm)
Genting Berhad is an investment holding and management company of Genting Group. Genting Group was founded by the late Tan Sri (Dr.) Lim Goh Tong in 1965 when he began the initial development works of building a 20-kilometre private access road, across tough mountainous terrains from the foothills to the summit of Mount Ulu Kali, located at 2,000 metres above sea level (Genting Group, 2010).
The company was incorporated under the Companies Act 1965 on 30 July 1968 under the original name of Genting Highlands Hotel Sdn Bhd to operate a hotel and casino, and to develop an integrated tourist complex in Genting Highlands, Malaysia. Genting's company registration number is 7916-A. The company changed its name to Genting Highlands Hotel Berhad upon its conversion into a public company on 24 July 1970. It assumed its present name of Genting Berhad on 9 June 1978 (Genting Group, 2010).
Genting Berhad is 39.5% owned by Kien Huat Realty Sdn Bhd, a private company controlled by the late Tan Sri (Dr.) Lim Goh Tong's family. Genting Malaysia Berhad ("Genting Malaysia") was incorporated under the Companies Act, 1965, Malaysia as a private company limited by shares under the name of Resorts World Sdn Bhd on 7 May 1980 in Malaysia. Genting Malaysia's company registration number is 58019-U. It changed its name to Resorts World Bhd upon its conversion into a public company on 14 July 1989 (Genting Berhad, 2010). On 30 August 1989, Genting Berhad and Genting Malaysia underwent a restructuring exercise, which resulted in Genting Malaysia's acquiring from Genting Berhad its entire gaming, hotel and resort-related operations inclusive of goodwill and other relevant assets. The shares of Genting Malaysia have been listed on the Main Board of Bursa Malaysia since 22 December 1989 (Genting Berhad, 2010).
Genting Malaysia is principally involved in the leisure and hospitality business and its activities cover theme parks, gaming, hotels, seaside resorts and entertainment. The jewel of its crown is Resorts World Genting, a premier integrated family leisure and entertainment resort at the peak of Genting Highlands that attracted 19.5 million visitors in 2009 (Genting Berhad, 2010).
Known as Resorts World Genting, the resort offers six hotels with 10,000 rooms, over 60 fun rides, 170 dining and shopping outlets, mega shows, business convention facilities and endless entertainment all at one location (Genting Berhad, 2010).
Apart from the highland resort, Genting Malaysia owns and operates two beautiful seaside properties called Awana Kijal Golf, Beach & Spa Resort in Terengganu (on the east coast of Peninsular Malaysia) and Awana Porto Malai in Langkawi (off the west coast of Peninsular Malaysia) (Genting Berhad, 2010).
5. Literature Review:
5.1: the factor of Genting Group involve into the international business.
5.1.1: Genting Group growth and expands into international business and maximize the profit.
In Singapore, there is only 2 casino opening in the gambling sector, one of it is owned by Genting Group and another 1 is owned by the Las Vegas Sands Corp. In the year of 2010 October, Las Vegas Sands beat estimates on Asia's casino growth. Las Vegas Sands Corp is one of the U.S. Casino companies expanding in Asia, which is the owner of the Sands Macau, The Venetian Macau and the Four Seasons Macau and reported third-quarter earnings that topped analysts' estimates after it opened a Singapore resort and benefited from Macau's gambling growth (Jinks, 2010). Marina Bay Sands is the world's second-most expensive casino after MGM Mirage's CityCentre in Las Vegas. In the Marina Bay Sands include 2560 hotel rooms resort, the casino, the meeting and convention facilities, part of its shopping mall and some restaurants and the second phase of the Marina will include a sky park, additional shops and more restaurants (Macau Daily Times, 2010).
Marina Bay Sands generated US$ 94.5 Million in earnings before interest, tax, depreciation and amortization (Ebitda) in 65 days after the opening. Net revenue rose nearly 51 percent to $1.59 billion. In Las Vegas, where a glut of hotel rooms has led to rate discounting, EBITDA fell to $66 million in the second quarter from $78 million a year earlier (Reuters, 2010). In the third quarter, Singapore's Marina Bay Sands generated US$241.6 million in EBITDA, and the Operating income was $166.2 million compared with $52.0 million a year ago. The casino revenue was US$414.5 million in the third quarter compared with S$190.8 million for the partial previous quarter and the first full quarter revenue of operation was US$485.9 million. Genting Singapore reports its third quarter results Nov. 11 and CLSA expects Resorts World Sentosa to report third quarter revenue of S$749 million compared with S$860.8 million in the second quarter. CLSA believe that the Singapore gaming market is the most lucrative investment opportunity in the entire Asian consumer space given the extremely strong revenue potential (Jones, 2010).
For the nine months, the company's operating income was $218.3 million. Adjusted property EBITDA was $336.1 million. Net revenues were $702.3 million (Bloomberg BusinessWeek, 2010). In Las Vegas, Sands' EBITDA rose to US$58.3 million in the third quarter from US$34.5 million a year earlier, as the company works to avoid discounting its rooms despite the lingering effects of the recession (Beasley, 2010).
Billionaire founder and Chief Executive Officer Sheldon Adelson, who loaned his company money two years ago to eliminate bankruptcy fears, opened the $5.5 billion Marina Bay Sands casino resort in Singapore in phases starting in April. Las Vegas Sands restarted the expansion in Macau, China, the world's biggest casino center. Strong revenue growth and increases in operational efficiency in Macau and outstanding results at Marina Bay Sands in Singapore contributed to substantial margin expansion (Bloomberg, 2010).
But in the year of 2010 December, Las Vegas Sands Corp.'s Hong Kong Listed Sands China Ltd. said that the Macau government rejected the casino company's application to develop the final two parcels of land in its China expansion plan. According to a U.S. regulatory filing today, Sands China has 15 days to apply for a government review, and 30 days to appeal to the courts in Macau to secure sites 7 and 8 on Macau's Cotai Strip. Shares of Las Vegas Sands slumped. Las Vegas Sands fell $2.17, or 4.2 percent, to $49.17 at 4:02 p.m. in New York Stock Exchange composite trading (Jinks, 2010). Sands China was suspended at HK$17.40 in Asia trading from trade in Hong Kong on Thursday pending the release of this announcement, has already spent US$102.4 million on pre-construction costs on the sites as of September 30th. Sands' Las Vegas-based parent company operates the Venetian and Palazzo casino resorts and convention center on the Las Vegas Strip, a casino in Pennsylvania, and this year opened the Marina Bay Sands in Singapore, one of two casino resorts in the island nation (Jinks, 2010).
Three Months Ended September 30,
Percent
2010
2009
Change
(Dollars in thousands)
Macau:
The Venetian Macao
$ 211,496
$ 150,389
40.60%
Sands Macao
74,103
77,115
-3.90%
Four Seasons Macao
48,962
10,152
382.30%
Other Asia
(5,563)
(8,088)
31.20%
United States:
Las Vegas Operating Properties
58,271
34,452
69.10%
Sands Bethlehem
16,361
8,323
96.60%
Marina Bay Sands
241,589
-
0%
Total adjusted property EBITDA
$ 645,219
$ 272,343
136.90%
Table 1
Source: Las Vegas Sands Corp. Summary financial report
(http://investor.lasvegassands.com/secfiling.cfm?filingID=950123-10-102774)
Nine Months Ended September 30,
Percent
2010
2009
Change
(Dollars in thousands)
Macau:
The Venetian Macao
$ 574,240
$ 381,849
50.40%
Sands Macao
225,076
188,522
19.40%
Four Seasons Macao
101,456
20,083
405.20%
Other Asia
(16,149)
(23,989)
32.70%
United States:
Las Vegas Operating Properties
229,555
202,336
13.50%
Sands Bethlehem
39,450
11,160
253.50%
Marina Bay Sands
336,055
-
0%
Total adjusted property EBITDA
$ 1,489,683
$ 779,961
91.00%
Table 2
Source: Las Vegas Sands Corp. Summary financial report
(http://investor.lasvegassands.com/secfiling.cfm?filingID=950123-10-102774)
5.2: The international market size in casino industry for Genting Group
US-based casino firm Las Vegas Sands Corp on Wednesday said some 500,000 gamblers have visited its new Singapore casino so far this month, with an average of about 25,000 people a day trying their luck at its gaming tables. When Marina Bay Sands was fully operation, the resort was expected to attract more than 70,000 visitors a day and 18 million visitors a year. After lifting a 40-year-old ban on gambling in 2005, the Singapore government approved the two casinos to boost the tourism sector and create another source of revenue for the island state, which lacks natural resources (EarthTimes, 2010).
In the Macau region, Macau had 2.31 million visitors in September 2010, and this is the 10 percent less than in August and the lowest number since July 2007. This is the reason a lot of casino owner trying hard to push the company to open a casino in this region (Jinks, 2010). Macau is the only Chinese city where casino gambling is allowed and has overtaken Las Vegas in terms of gaming revenue since the sector was opened to foreign competition in 2002 (Brieger, 2010). When U.S. casino giants Las Vegas Sands (LVS) and Wynn Resorts (WYNN) first set foot on these islands in the South China Sea a few years ago, the analysis warned their bet on Asian gambling could turn into a bust, but their bet appears to be paying off, at least for now. The city had not only overtaken Las Vegas as the world's top Gambling market, but its casinos are rebounding smartly even as gambling remains stuck in America's recessionary mud (Chu, 2010).
In October, Macau gambling revenue hit an all-time high of $1.59 billion after setting a record just two months earlier. The Chinese New Year's holiday, which lasts for about two weeks starting on Feb. 14, is one of the busiest gambling periods of the year and should provide another boost to business as Asian workers take vacation and head for the casinos (Chu, 2010).
6: Methodology
Theoretical framework for this study is:
Based on the objective of this research, data used were secondary data in order to complete this research. Most of the data were obtained through the access of Internet.
The information from internet is mostly from the company profile, news, analysis, journal, company's reports, articles, and organization record are the major sources for this research. Besides that, text books and past researches were also been used in order to strengthen the theories form by those theorists.
Independent variable is a factor to manipulate in the test. An independent variable influences the direction and size of dependent variable. The independent variables of this research are the Genting group growth and expand into international business, profitability, and the international market size in casino industry. Dependent variable is the responds to the independent variable, it also can mean that the one that influenced by independent variable. The dependent variable of this research is the factor of Genting group involve into international business.
