Wednesday, December 09, 2009

Genting Malaysia Buys Properties From Genting Bhd

Yeah, it's a known fact that Genting Malaysia (Resorts World) is a cash rich company.

It's a known fact that most suggest buying Genting Malaysia for it's so-called cash-per-share yardstick.

Some don't like this yardstick.

I don't also.

Because this yardstick is not a fool proof investing strategy.


Because, ultimately the decision on how the company uses the cash in the company is beyond the say of the minority shareholders. For example, if the company decides to splash the cash at some questionable investments, we, the minority shareholders, can only make some noise over. And more often than not, it's just some empty tin cans making lots of noises.

Anyway, on the Edge Financial Daily
Genting M'sia buying PROPERTIES from parent for RM228.64m!

  • Genting M'sia buying properties from parent for RM228.64m
    Written by Joseph Chin
    Tuesday, 08 December 2009 19:30

    KUALA LUMPUR: Genting Malaysia Bhd (formerly RESORTS WORLD BHD []) has entered into two related party transactions with its parent GENTING BHD [] by proposing to buy two companies and their PROPERTIES [], for a total of RM228.64 million.

    Oakwood owns the 25-storey Wisma Genting in Kuala Lumpur while GHTP owns two parcels of land in Segambut, Kuala Lumpur.

    Genting Malaysia, as the largest single tenant, occupies eight floors and two basement levels in Wisma Genting for a total annual rental of RM3 million. The first acquisition will thus enable Genting Malaysia to reduce its annual rental expenses at the consolidated level.

    "In addition, Genting Malaysia will earn an annual rental income of approximately RM17.3 million from the other tenants of Wisma Genting, who will provide a source of sustained recurring income and long term value for the property," it said.

    As for the acquisition of the Segambut land, which Genting Malaysia is using as a storage area and depot for its buses and limousines, it will reduce its rental expenses at the consolidated level by about RM300,000 annually.

    "In addition, there is potential for the Segambut land to be developed and improved upon, either for Genting Malaysia’s use or for other future purposes," it said.

A related party transaction!!!

Don't you hate such transactions??!!

Buying property from its parent, which ultimately means, money going from left hand to right hand!

Does Genting Malayisa really needs to buy these properties at all???

And is Genting Bhd in dire need of funding that it needs to use such low inter-company sales agreement to raise funds???


solomon said...

I dont like RPT transaction but I am selective on who are conducting the RPT transactions.

For Genting, it sounds stupid at the eyes of corporate governance. However, if the end results could bring values eventually, I think it should only be the last resort move.

Well still, it looks like squeezing the milk from cows in the same farm. My guess is that there might be some corporate moves by Genting in this few months....

Moolah said...

RPT is RPT is RPT.

There should be NO exceptions at all.

ENd of the day, the major shareholders are telling the minority shareholders that what matters to them is themselves and nothing else.

And ENd of it, the minorities shareholders will keep getting the short end of the stick.

Yes, some say, the stick still might have some sort of value... but what for?

Does it sound like a fair and fun game if the game is played where one only gets the shorter end?

And if it's not fair, why bother at all?

solomon said...

Yup, I certainly agree with you calling a spade as a spade.

Again, the fishermen (major shareholder) knows how to fish (minority shareholder). Often, without suffice information, the minority like me / us get screw. Hahaha & is a fun game if we know the rules, fair if we win...

The cow sense suggests that if you don't like the cash cow, then hold the cow's mother??

Moolah said...


I have been told too many times that what I like or don't like really isn't an issue and certainly isn't important because an given stock can go up at any given day.