“Bursa Malaysia queries Genting Malaysia over its US$41 million deal to fully acquire Empire Resorts, raising governance and valuation concerns amid persistent losses.“
Kuala Lumpur, 09th May 2025, 12.50pm – Bursa Malaysia Securities has raised concerns over Genting Malaysia Bhd’s proposed US$41 million (RM175.5 million) acquisition of Empire Resorts Inc, questioning the rationale, valuation, and financial impact of the deal that would see GENM take full ownership of the loss-making US-based casino operator.
In a detailed query issued Thursday, the stock exchange regulator submitted 20 questions to GENM, demanding greater transparency on the acquisition, which involves purchasing the remaining 51% stake in Genting Empire Resorts LLC (GERL)—currently owned by Kien Huat Realty III Ltd, a private investment vehicle of the Lim family, which also founded the Genting Group.
Upon completion, Empire Resorts—which owns Resorts World Catskills, Resorts World Hudson Valley, and Resorts World Bet in New York—will become a wholly-owned subsidiary of GENM.
Bursa Questions Valuation and Justification of Deal
Among the key issues raised by Bursa were:
- The justification for the purchase price
- Whether any independent valuation was conducted on GERL
- Liabilities GENM would assume post-acquisition
- Empire Resorts’ financial performance and future prospects
GENM responded that no separate valuation was done on GERL, as the underlying asset being acquired is Empire Resorts. It cited a valuation range of US$36.5 million to US$46.9 million for Empire Resorts, independently assessed by CBRE Securities LLC on April 22, 2025. The valuation methodology included a discounted cash flow analysis (50%), precedent transactions (35%), and public market comparables (15%).
GENM will also take over a US$39.7 million debt owed by Empire Resorts to Kien Huat, but asserted that no additional contingent liabilities would be assumed.
Empire Resorts: Still Deep in the Red
Empire Resorts has consistently reported net losses despite gradual revenue growth:
| Year | Net Loss (US$) | Revenue (US$) |
|---|---|---|
| 2024 | 53.1 million | 296.3 million |
| 2023 | 57.0 million | 292.2 million |
| 2022 | 44.2 million | 267.3 million |
GERL, the holding company, posted a net loss of US$54.1 million in FY2024, slightly narrowing from US$65.4 million in FY2023.
GENM said Empire Resorts plans to boost gaming revenues at Resorts World Catskills by targeting broader demographics in upstate New York, while also streamlining operations to cut costs.
However, the group acknowledged that ongoing losses remain a concern, and that performance is subject to regulatory risks, market volatility, and competition in the US gaming sector.
“There is no assurance that Empire Resorts can maintain a positive financial trajectory,” GENM stated, adding that interested directors have abstained from all board discussions and voting on the deal.
Analysts View Deal as Risky and Dilutive
The proposed acquisition has drawn scepticism from analysts, with some expressing concerns over GENM’s continued exposure to a loss-making business.
PublicInvest Research downgraded GENM to a “trading sell” and slashed its target price from RM2.53 to RM1.66, warning that the deal may hinder earnings recovery and raise governance red flags due to the related-party nature of the transaction.
“Between FY2020 and FY2024, Genting Malaysia recognised annual associate losses of RM160 million to RM280 million—largely from Empire Resorts,” the firm said.
Hong Leong Investment Bank (HLIB) noted that while the price is within fair market value, the deal is likely to be earnings-dilutive and could strain GENM’s balance sheet.
Out of 17 analysts tracked by Bloomberg:
- 6 have “Buy” calls
- 7 have “Hold” ratings
- 4 recommend “Sell”
The average target price stands at RM2.16, with CGS International giving the highest forecast at RM3.65 and Nomura the lowest at RM1.60.
On Thursday, GENM shares dipped one sen to RM1.73, giving the company a market capitalisation of RM9.81 billion. The stock has declined 23% year-to-date.
