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Malaysia’s Potential Tax Hike Won’t Affect Genting

The tax climate in Malaysia may be changing for gambling companies. Officials have outlined plans to bring tougher taxation on companies and business that are related to the gambling industry. However, experts believe that this will not impact the revenue of operators.

Taxes Go Up, Business Is Steady

Malaysia has long kept the same level of taxation. The last change was done in the late 1990s when the amount went up by 3% to its present state of 25%. Since then, nothing has so much as suggested that taxes need to be altered in any way as to accommodate the realities of the gambling industry today.

However, this may be oncoming and analysts are now thinking if the market can bear it. Maybank Kim Eng Research and Nomura International released their own opinions of the upcoming changes in the way casinos are taxed. They focused on analyzing one of the flagship brands, Genting Casino.

According to the analysis, there is little to suggest that any fluctuations in the rate of taxation can bring the house down for the brand. The analysts were sure in their forecast as they hinted at the fact that companies such as Genting Casino usually factor rumors about changes in taxation in their business development plans.

Even if Genting has to undergo a new and slightly more rigorous taxation process, Nomura remains confident that the company’s revenues will continue to grow. The trend has kept since 2017, and Genting is on the up financially-wise. The company is also sure that Genting will continue to forge ahead in 2019 by expanding its profits margins, forecasting a solid growth in Genting’s EBITDA.

Genting Continues to Grow Not Only Financially

Apart from anticipating the changes in taxation, Genting has been actively seeking to develop its assets. The brand is building new facilities at Resorts World Genting and a 20th Century Fox World and Skytropolis theme park is also going to officially open doors in Q1, 2019. With the expansion of the project, additional 1,500 rooms will be added to the already impressive portfolio.

Nomura commented that the recent dips in the share price was also nothing to worry about, occasioned by the rumors of a pending tax hike. More specifically, Genting’s shares lost 11% of their value between October 9 and now but this slump is expected to be short-lived.

The successful development of the Genting Integrated Tourism Plan (GTIP) has given Genting an impressive foothold in Malaysia, even if regulator talk has continued to dominate the daily discourse. However, nearly all properties that are part of the GTIP plan are completed.

Genting Malaysia is expecting to add a number of venues dedicated to entertainment that are nearing completion, including The Void, which is a virtual reality entertainment center.

More properties that Genting owns is the Zou Genting nightclub, part of the Sky Avenue mall. The possibility exists that Genting can bear the brunt of the taxation, but for this to happen, the jump will have to be between 8% and 10%, which is an unlikely hike. With this in mind, the company is more than likely to uphold its Q3 financial forecast.

Julie Moraine

With 4 years experience as an analyst, Julie—or ‘Jewels’, as we aptly refer to her in the office—is nothing short of a marvel-worthy in her attention to the forex and cryptocurrency space as she quickly became the first pick to co-pilot education to the masses with Mike.