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Shareholders of Genting Malaysia Bhd voted yesterday in favour of resolutions to acquire the British casino operations collectively known as Genting UK from Genting Singapore plc despite initial misgivings over the related party transaction nature of the deal.

It is understood that shareholders mainly asked questions on the rationale for the acquisition and on profitability, as Britain is not seen as a growth market due to prevailing economic conditions and tougher operating conditions.

“Shareholders wanted more clarification on the acquisition and whether it’ll be profitable,” a shareholder said, adding that HSBC Nominees and Cartaban Nominees called for a poll before the voting.

The vote was 60.39% or 1.17 billion shares, for the acquisition, which was worth RM1.67bil. Genting Malaysia, the owner and operator of Resorts World Genting, is 47.33% owned by Genting Bhd, which also owns a 52% stake in Genting Singapore.

The over-lapping shareholding among certain institutional shareholders in Genting Malaysia and Genting Singapore could have been a major catalyst in the way the voting turned out as it did. Blackrock Fund Advisors and Vanguard Group Inc were among those with stakes in both companies.

A man walks past a Genting signboard at Genting Highlands. Genting Malaysia shareholders have approved the purchase of Genting UK. — Reuters

Genting and its chairman cum chief executive officer Tan Sri Lim Kok Thay did not take part in the voting.

An analyst with a foreign investment bank told StarBiz that the voting pattern showed that these shareholders preferred to see the British casino operations, which faced quite a few obstacles including higher taxes and a tougher operating environment, under Genting Malaysia.

Analysts in recent reports said the British casino operations were a better fit for Genting Malaysia rather than for Genting Singapore.

As for Genting Singapore, the analyst said this would look good for the company, which would be able to concentrate on the integrated resort business.

Moreover, the gaming industry in Singapore was recently re-rated with Genting Singapore showing sterling results.

A market observer noted that in a situation where there were overlapping institutional investors and better prospects in Singapore, it was “normal to make Genting Malaysia a sacrificial lamb to help Genting Singapore”.

He added that based on the number of shares, it appeared that these institutional shareholders were quite active in voting.

Meanwhile, Genting Malaysia deputy chairman Tun Mohd Haniff Omar said all proposals to expand the business were looked at based on merits by the company’s board, including those involving related party transactions.

“We’ve this opportunity in Europe (with Genting UK), we hit the ground running with a going concern that is already cash flow positive following the remedial measures taken by Genting Singapore,” he said.

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CIMB Group Holdings Bhd consolidated its position as the biggest stock on Bursa Malaysia for a second day, ahead of close rival Malayan Banking Bhd (Maybank), amid some mild selling pressure yesterday.

Shares in CIMB eased one sen from a record to close at RM7.91, while Maybank fell two sen from a 2½-year high to settle at RM8.12.

While Maybank is trading at a higher price than CIMB, the former’s share capital is smaller at 7.08 billion compared with CIMB’s 7.33 billion shares.

This gives CIMB a market capitalisation of RM57.99bil versus Maybank’s RM57.47bil. In March, Maybank was ahead of CIMB by RM3bil.

Data compiled by StarBiz show CIMB’s market value grew RM8bil, or 16%, from RM49.9bil recorded on March 9. Maybank trailed with a 10% rise as its market worth increased by RM5bil over the same period.

The FTSE Bursa Malaysia KL Composite Index (FBM KLCI) rose 6.7% to 1,405.77 points yesterday, its highest level since February 2008.

Six of the 10 biggest counters on Bursa that were featured in a StarBiz report published on March 10 climbed faster than the benchmark index over the same period.

Shares in Genting Bhd surged 33%, the fastest pace among the gainers.

Analysts attributed the buoyant market conditions, especially in the past two months, to a resurgence in buying interest from local and foreign investors on back of the ringgit’s appreciation and corporate earnings recovery.

“With the market having broken through the key resistance level of 1,400 points on the back of strong banking sector results as well as renewed foreign interest on a stronger ringgit, we see the market heading towards our 1,465 points FBM KLCI year-end target,’’ OSK Research said in a strategy report yesterday.

The ringgit has strengthened 10.5% against the US dollar, the biggest gain in Asia so far this year.

Data compiled by StarBiz also show that the market value of half of the big-caps grew by at least 10% from March 9.

But despite its massive 33% price surge, Genting remained at the bottom of the top 10 list of biggest firms on Bursa with a market cap of RM33bil, which was RM2bil lower than IOI Corp Bhd’s RM35bil.

The gap, however, is razor thin at the top.

Maybank had released a strong set of results for the year ended June 30, while CIMB and Genting are among the big firms expected to release their latest quarterly results later this week.

“With key blue chips such as CIMB, Genting and Sime Darby yet to report their earnings, we still see some legs for the market,’’ OSK Research said.

The market is expecting CIMB’s earnings to outpace consensus estimates for the third quarter in a row. Genting’s upcoming results are also expected to impress the market, but Sime Darby may disappoint.

Meanwhile, IOI Corp shares climbed to a three-month high of RM5.25 yesterday after the group reported an increase in profit for its quarter ended June 30.

IOI Corp was one of three firms that saw a decline in market value over the six-month period. Sime Darby was the worst performer, down 10% to RM47bil, while Maxis Bhd eased slightly to RM40.6bil.

The combined value of the 10 firms grew 7% from March 9 to RM429.7bil at yesterday’s close, while the whole market value, estimated RM1.12 trillion, was 7.7% higher from where it was in March.

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Boustead Holdings Bhd has obtained the approval from the Securities Commission’s equity compliance unit to acquire the controlling stake in Pharmaniaga Bhd.

Boustead had proposed to acquire 86.8% of Pharmaniaga from UEM Group Bhd for RM534mil cash, or RM5.75 per share.

Boustead in its filing to Bursa Malaysia yesterday said that under the mandatory takeover offer, Boustead would be obliged to undertake all the remaining 13.19% or 14.1 million shares of RM1 each of the existing issued and paid-up share capital of Pharmaniaga not already held by Boustead.

Meanwhile, Pharmaniaga’s net profit for the second quarter ended June 30 fell 16.9% to RM14.7mil against the previous corresponding quarter due to higher selling and distribution expenses as well as personnel costs.

The previous corresponding period also enjoyed lower operating costs and recognition of a gain on disposal of property, plant and equipment of RM2.3mil.

However, Pharmaniaga’s revenue increased by 5.1% to RM350.3mil for the quarter under review.

Managing director Mohammad Abdullah said improved internal efficiencies and productivity were essential to mitigate the impact of rises in selling, distribution and personnel costs.

Performance for the second quarter showed a marked improvement over the first quarter with revenues gaining by 10.3% and a 58.1% jump in net profit.

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