Market Analysts Has Negative Reaction Towards Genting Buying Over The Equanimity

After Genting Malaysia came into the possession of luxury yacht The Equanimity for US$126 million (RM514.6 million), their share went up 11 sen, 3.47% to RM3.28 Wednesday (Apr 3).

But as of yesterday (Apr 4), the share was down by to close of 3 sen or 0.9 % lower at RM 3.25 on 5.61 million shares done, The Sun reported.

According to The Edge, the shares rise of the casino company has puzzled managers and analysts. Analysts who also track the gaming group made a comment that is hard to justify the future return of the superyacht.

Source: Han Travel

Genting Malaysia, under Bursa Malaysia yesterday said, the proposed possession will let the company differentiate itself from its competitors. This will provide Genting Malaysia with a unique and competitive angle for its premium customer business.

“The Equanimity has nothing to do with the Genting Malaysia’s business.

“It’s like buying a sports car, you just enjoy yourself.

“I don’t know what kinds of benefits Genting Malaysia can get out of it… whether it’s a direct or indirect benefit”, said an unnamed chief investment officer.

Source: The Star

Another anonymous analyst believes that the purchase is likely to be more than a business decision. “It is a big investment, but it is difficult to justify its return…

“(Imagine) what kind of revenue Genting Malaysia (to generate) to even break even the purchase cost within 10 years”, said the analyst.

However, according to The Star, Genting is most likely to make use out of it by selling it to their VIP guests.

Source: Twitter

RHB research said that it the Equanimity’s facilities will appeal to VIPs on top of Genting Malaysia’s existing luxurious offerings, including the five-star hotels, private jets and helicopters.

That said, Genting Malaysia’s sister company, Genting Hong Kong Ltd, currently owns a shipyard in Germany that builds superyacht and operates a luxury yacht chartering division. Some said this might be the reason why Genting Malaysia bought over the Equanimity.

Contrarily, TA Securities analyst Tan Kam Meng is “neutral” on the buying of the yacht. Tan explained that he sees it as an asset to support its leisure and hospitality businesses.

In terms of pricing, Tan said it is half of the original price and below the reserve price. Thus, he said Genting actually “did not pay too much” for the vessel.

RHB also believes that Genting maintenance cost would be lower than what has incurred on the government given that it has expertise in luxury cruise operations. It was reported that the government had spent RM14.5 million for the yacht’s maintenance since claiming it back in last August.

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