Genting Malaysia (4715), a crisis or opportunity? (Part 2)

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Genting Malaysia Berhad's Financial Analysis

Income Statement
Source: Genting Malaysia' Annual Report

GENM's revenue has consistenly grown for the past 5 years, with CAGR of 4%. Its business is considered stable unless there is any significant event happen (Covid-19).

Its EPS has grown in a slower pace (2%), which mainly due to increase of finance cost and hiking of casino duties.

However, GENM is generous in giving dividend. GENM's dividend per share is increasing over the year, and the yield is attractive at current price. It is suitable for investor which focus on dividend.

 Balance Sheet
GENM is rich in cash, it has RM6.4billion of cash as at 31 December 2019. Its cash is able to cover its expenses for 4.33 years, which indicates that GENM can still survive if it stop operation for certain period.
Source: Genting Malaysia' Annual Report

Although it's in net debt position, however, 85% of its borrowing is belong to long term borrowing. Hence, it don't have the obligation to repay the principal in the near term.

Source: Genting Malaysia' Annual Report

Besides, its debt-to-equity as at December 2019 position is 55%, which indicates GENM has a healthy debt structure.

Cash Flow
                                                 Source: Genting Malaysia' Annual Report

The Group's net cash from operating activities is increasing over the year, with 6-years CAGR of 8.95%. GENM's return from cash based on share price as at 20 April 2020 is 19%, which is considered attractive for investor, as it's like cash generating machine that will generate 19% of cash to investor every year.

However, it has significant amount of cash outflow from investing activities every year, and most of the outflow is from purchase of property, plant and equipment. This is in line with GENM's plan to revamp the mall, hotel and theme park for Genting Highland.

Summary
GENM is a slow growing company, with 5-years CAGR of 4%. The growth rate is similar with country's GDP growth. Although its growth rate will be boost by the opening of theme park, however, the growth rate may not as attractive as other company.

A lot of people are concern about the impact of suspension of business to GENM's due to Covid-19 outbreak. Some people may worry whether GENM will bankrupt? The reason of bankruptcy of a company, is mainly because the company does not have enough cash flow to pay its debt obligation. GENM has RM6 billions of cash, and healthy debt structure. Besides, 85% of its borrowing is long term borrowing, this means that GENM does not have solvency risk in the short term.  



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