COME holiday season in the second half of the year (2H25), Klang Valley folks view Genting Highlands as a destination that evokes both delight and a touch of apprehension.
The hill resort, a mere 50km from Kuala Lumpur, offers a quick getaway for urban folks who are not keen to drive too far. In the past, it provided a reprieve from the bumper bustle of the city, but the same can no longer be said.
The restaurants, cafes, theme parks and premium outlets, combined with the cooler temperatures and, of course, the casinos, make the resort a popular destination during the holidays.
However, this often leads to heavy traffic, with slow or standstill vehicle crawls starting right after the Gombak toll on the Karak Highway.
Genting Bhd and its subsidiary, Genting Malaysia Bhd (GenM), deserve credit for their ongoing efforts to refurbish the retreat. But while the hilly holiday destination continues to draw visitors, analysts are divided on the outlook for Genting and its leisure subsidiary.
The diverging view - most experts rate GenM as "hold" but recommend "buy" for its parent, despite better second-quarter (2Q25) results for GenM - stems mainly from Genting's exposure to multiple industries, which cushions it against volatility.
According to Vincent Lau, head of equity sales and analyst at Rakuten Trade, GenM is involved in a variety of investments that may require a longer gestation period for the return on investments (ROI) to be tangible, including its current bid for one of New York's coveted full casino licences to expand its existing operations at Resorts World New York City (RWNYC).
GenM also announced in May that it would acquire full control of Empire Resorts, which owns Resorts World Catskills (RWC) and other New York assets.
If the licence is granted, RWNYC will expand into an integrated resort worth US$5.5bil, a decision expected by December.
"GenM's potential returns will take time, which is why many analysts call it a 'hold' or a 'market perform'. In addition, 2Q25 dividends weren't paid," Lau tells StarBiz 7.
Hong Leong Investment Bank (HLIB) Research, in an Aug 29 note following the 2Q25 results, anticipates ongoing operating challenges and uncertainties from GenM's UK and US business segments, as well as Empire Resorts.
These factors could pose downside risks to the recovery of its Malaysian operations.
On a separate note, HLIB Research views GenM's recent proposals announced in mid-August positively. These include the group's subsidiary, Empire Resorts Inc, selling its non-gaming assets, such as the RWC hotel.
This move highlights GenM's efforts to pursue value- accretive measures aimed at strengthening its earnings profile and balance sheet.
"The proposals are still in their early stages, and progress has slowed following recent developments.
Maybank Investment Bank Research (Maybank IB) notes that Empire Resort plans to liquidate non-gaming assets, acquire land, cut debt and reduce expenses. According to GenM, the Sullivan County Resort Facilities Local Development Corporation is working to secure financing for the non-gaming asset purchase.
The group aims to finalise the proposal by year-end.
If successful, this could increase GenM's financial year 2026 (FY26) earnings by 24% and raise the target price by 30 sen to RM1.95, as reported by Maybank IB.
Genting's diversified exposure across various sectors, including its 20.3% stake in Singapore's TauRx Pharmaceuticals Ltd, could bring potential benefits, as noted by Lau. TauRx is currently awaiting FDA approval for its Alzheimer's treatment, hydromethylthionine mesylate.
While Genting and GenM are part of the same group and share leadership, their profiles differ. GenM focuses exclusively on leisure and hospitality, whereas Genting operates across multiple industries. Additionally, Lau highlights the intense competition in the US casino market.
He acknowledges that both companies are solid and, if dividends are paid as anticipated by the end of FY25, they are worth considering as stock options for the longer term.
With HLIB Research, Philip Research, CIMB Securities, and Maybank IB all issuing "buy" recommendations for Genting, HLIB Research notes that the group is expected to benefit from the anticipated increase in foreign tourist arrivals at both Singapore and Malaysia, driven by key source markets in the Asia-Pacific region.
In Singapore, the research outfit said the momentum will be further reinforced by the rollout of high-profile attractions such as Illumination's Minion Land, Mandai's Rainforest Wild Asia, and the Disney Adventure Cruise Ship.
"Meanwhile, Malaysia stands to benefit from its official assumption of the Asean chairmanship in 2025. This momentum will continue into Visit Malaysia Year 2026," it adds.
An analyst with a foreign research firm tells StarBiz 7 that Genting offers diversification benefits as it is less dependent on Resorts World Genting alone, compared to its subsidiary GenM.
She says the performance of Genting's Singapore unit (Genting Singapore, listed separately) continues to be a key driver, given robust international tourism inflows.
"Balance sheet remains healthy, with gearing at manageable levels, though capital expenditure commitments (expansion in Singapore, potential energy investments) could pressure free cash flow in the near term," she opines.
Genting's prospects are supported by tourism growth in Malaysia and Singapore, potential licensing opportunities in New York, and stable oil and gas earnings, the analyst says.
However, regulatory uncertainties in gaming, weak palm oil prices, and currency fluctuations pose significant risks. GenM, being more focused on gaming, depends heavily on visitor traffic at RWG.
"Domestic demand remains strong, helped by improved connectivity and events-based tourism, but the property is nearing a mature growth phase without major new attractions post-Genting Integrated Tourism Plan.
"Earnings are more vulnerable to potential changes in Malaysian gaming tax policy," she says.
In addition, the analyst says cost inflation, competition in US gaming, and slower-than-expected recovery in UK operations are risk factors for the gaming and leisure giant, as it offers higher beta to gaming recovery but comes with regulatory and cost risks.
"In current market conditions, preference may be tilted towards Genting for resilience, but GenM could outperform if tourism momentum accelerates and US expansion materialises," she says.