Global gaming giant Genting Berhad has announced two major investments into its oil and gas and its energy segments that will see it tip more than US$1 billion into projects in China and Indonesia.
In a series of filings on Thursday, the company revealed it has signed a US$963 million Engineering, Procurement, Construction, Installation and Commissioning (EPCIC) contract with Wison New Energies Co., Ltd under which Wison will construct a Floating Liquefied Natural Gas (FLNG) facility. The facility, targeted for completion in 2Q26, will be towed to its final destination in West Papua, Indonesia, for final commissioning in 2026 where feed gas will be supplied from the concession area of the Kasuri Block in West Papua, Indonesia, to Genting Oil Kasuri Pte. Ltd., (unlisted), which is 95% owned by Genting.
Genting said its near US$1 billion investment will be funded via internally generated funds and project financing, with the company in an advanced stage of securing project financing from a group of China-based and international lenders.
On the same day, Genting Berhad revealed it has also signed a share subscription agreement with Jineng International Energy Co., Ltd and a Heads of Agreement with SDIC Power Holdings Co., Ltd. for the acquisition of Jineng’s 49% equity in SDIC Jineng (ZhouShan) Gas Power Generation Co., Ltd for a total purchase price of US$14 million. A further US$46 million investment is expected in order to achieve commercial operations by 2025.
SDIC Jineng is a company established to own and develop a gas-fired power plant in ZhouShan in the Greater Shanghai Area of Zhejiang Province, China, where SDIC Power is the 51% majority shareholder.
The project will, Genting said, become the first H class unit to operate within Zhejiang Province when it achieves commercial operation in 4Q24 with power generated to support Zhejiang Province.
In a note, Nomura analysts Tushar Mohata and Alpa Aggarwal said Genting’s gaming business will continue to be its primary value driver given that the power, and oil and gas divisions contributed just 6% to group-wide revenue in 2023, but suggested the move could still be viewed positively.
Notably, the company’s share price is still trading at a 40% discount to the value of its listed subsidiaries, Nomura said, as it reiterated a BUY rating on Genting Berhad shares.
“We think that at current levels, the holding company’s RNAV discount is unjustifiably wide, and we think this discount will narrow,” the analysts wrote. “Because of the faster recovery of Genting’s net income line toward pre-pandemic levels, we prefer Genting Bhd over Genting Malaysia. We believe Genting Bhd’s Singapore earnings should moderate in the coming quarter due to seasonal off-peak volumes, and Malaysia margins should fall due to the 2pp sales and services tax hike in March and closure of old casino floors.
“That said, we think its Resorts World Las Vegas (RWLV) earnings should improve and expect the power division’s earnings to rise as the Banten plant is operational again, after its planned maintenance.”
RelatedPosts
