GENTING Group is the latest casualty of the coronavirus pandemic after its Hong Kong unit suspended payments to creditors, reports Bloomberg today.
While Genting Hong Kong Ltd is a separate entity from Genting Malaysia, group chairman Lim Kok Thay holds stocks in both companies, sending fears that the former’s woes will weigh on the latter’s performance here.
Genting HK is a cruise operator, a sector hit badly by travel curbs and last Wednesday, it said in a filing with the Hong Kong Stock Exchange that Covid-19 has resulted in the suspension of sailing globally.
Given the ongoing uncertainty of the situation, it issued profit warning announcements regarding its results for the six months ended June 30.
Last week, Genting Bhd’s share price fell more than 4% to become the worst-hit entity among the KLCI’s 30 stocks at Bursa Malaysia after the Genting Hong Kong Ltd news.
“There’s a risk, of course, of a related party transaction with one of the Genting Group bailing out Genting HK. If that happens, then clearly the group can be hurt,” Mak Yuen Teen, associate professor at the National University of Singapore Business School, told Bloomberg.
According to Genting Hong Kong, the pandemic has had and will continue to have a material impact on its financial position and operating results, although analysts have ruled out cross defaults.
The group has undertaken cost reduction and cash-conservation measures while the Genting Group also imposed its first group-wide pay cuts and shrinking its local workforce.
Genting Bhd closed at RM3.54 yesterday. – August 27, 2020.
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