留學生經濟學dissertation代寫
08-27, 2014
工業的背景
自20世紀中葉以來，經歷了許多經濟的沉浮，世界的先驅看到了許多基本和深遠的社會變化。顯而易見的是隨著經濟財富的改善，生活和工作在這些國家的所有人們已經開始考慮改善生活水平。這些改善增強了改進了的生產力和再分配的勞動力。
不僅在馬來西亞，在大多數的國家，休閑和酒店業已經成為工業不可或缺的一部分，而這有助于改善經濟財富。它可以當作旅游產業的互補。因為它是一個利用國家資源作為收入來源來吸引外國人來并且蓬勃其他行業的發展。例如，游客飛越馬來西亞這使得我們有機會摸索新的投資方式并且嘗試涉及它，這可能幫助我們由于流入貨幣而使得經濟增長。
但首先，休閑和酒店業究竟是什么？這個部分是由兩部門組成，藝術娛樂休閑部門和住宿食品服務行業。
Background Of The Industry Economics Essay
Since the middle of the twentieth century, many economic goes ups and downs, the pioneer of the world have seen many fundamental and far-reaching changes within society. The obvious view is the amelioration in economic wealth, has considered the improvements in standards of living for the ensemble of people living and working in these countries. These alterations have enhanced the improved productivity and redistribution of the workforce.
Leisure and Hospitality industry has become part of integral industries that helps to improve in economic wealth, not only in Malaysia but in most countries. It can regard as a complementary of tourism industry. As it is an income generator by using sources of country to attract foreigners to come over and flourish other industries too. For instances, tourists who fly over Malaysia will have an opportunity to fumble a new investment and attempt to involve it, this might help our economy grow well because of the inflow currency injection.
But first, what exactly is leisure and hospitality industry? This sector is made up of two parts, which are the arts, entertainment and recreation sector and accommodation and food service sector. The arts, entertainment, and recreation sector include a vast range of constructions that operate facilities or services provided to cater variety of cultural, entertainment, and recreational interests of their patrons, examples like theme park, shopping mall, theme museum. (Leisure and Hospitality Industry)For the most part, it is built luxury-based, evade from the fundamental needs. While the accommodation and food services sector comprises constructions providing customers with lodging and preparing meals, snacks, and beverages for consumption, examples like famous food, hotel with different rated and superior services.This service-based industry thrives on the leisure activities of patrons. This kind of business that the hospitality industry garners is momentary, but it accounts a large sum of its revenue. Therefore, with the subtle leisure and hospitality industry will push the tourism industry up. (What Is the Hospitality Industry?)#p#分頁標題#e#
Leisure and hospitality industry had indirectly developed in so many aspects too such as land, country, other businesses and it also decrease the unemployment rate too. For the land development, hospitality experts did a good job of flourishing some unused spaces and built a glamorous building on it to accommodate tourist that need place to stay and obtain income from that way. With the phosphorous of hospitality industry, there have few rates of hotels for tourist to choose whether which will appropriate for them. For examples, Genting Highland Malaysia has a few different rate of hotel in the small same site to let the tourists have as much as choices to select their apposite hotels.
For the development of other businesses, such as food, stores, theme parks and shopping malls will glowing too due to the intrude of leisure and hospitality industry. In contra versa, tourists maybe interesting in food or theme park or cultures of a country and tend to come over for that specific intention, this will also enhance the leisure and hospitality industry. For an actual example, Singapore recently has constructed a new theme park, Universal Studio and Casino have attracted a lot of foreigners spend their time in that country to regale themselves. Exceptional service is usually very important for. Customer satisfaction like what they purposely come for, usually leads to consumer loyalty, which helps to ensure the success of a company in the hospitality industry.
For the development of country and decreasing the unemployment rate, leisure and hospitality has create an opportunity for the tourist to search a new investment as I said in the above paragraph and it has fill in the people that need a job.
In conclusion, hospitality and leisure industry are so sensitive to economic and in competitive market conditions. Hospitality and Leisure companies have to cater the challenges of current world market by comprehending and arising strategies to meet economic conditions, consumer trends, competition, technology and concerns regarding security and social responsibility. (646 words)
(b)Main Competitors in the Industry
As we know, GentingBhdis a well-known corporation in Malaysia with its prosperous and successful hotel, resort as well asleisure industry.Moreover, hospitality and leisure is the main revenue for GentingBhd. Therefore, we will emphasize the hospitality and leisure segments in here. In fact, the only one large casino space in Malaysia is built in Resorts World Genting which means GentingBhd monopolizes the casino market in Malaysia as well. However, the GentingBhd is having a tough competition with several rivals in overseas casino market. Besides that, GentingBhdcompetes perfectly with other resorts and hotels nationally, regionally and also globally. Therefore, there are few competitors in hospitality and leisure industry that GentingBhd might beware.
Las Vegas Sandsis one of the main competitors for GentingBhd. Recently, it developed Marina Bay Sands in Singapore and it is the most expensive standalone casino property in the world. With its distinctive and marvel architecture of the resort – the Sands Skypark and also the amazing and luxury interior of the casino, it does attract many gamblersglobally which gives an impact to Resorts World Sentosa in Singapore. (Acura, 2010)Resorts World Sentosa is one of the resort and casino properties of GentingBhd. It is one of the most expensive casino properties in the world after Marina Bay Sands.(Wikipedia, Resorts World Sentosa) Indeed, the third quarterly reports in 2010 shows that opening of Marina Bay Sands has wiped out the gaming revenueof Resorts World Sentosa in the second quarter. (Cohen, 2010)It obviously indicates that Resorts World Sentosa have a perfect competition with Marina Bay Sands.#p#分頁標題#e#
In other hand, GentingBhd is also competing with MGM Resorts International, the Las Vegas-based casino company in global casino market.(Reuters, 2012) Resorts World Casino New York City is builtat Aqueduct Racetrack in New York City, USAby GentingBhd which was opened on 28th October 2011 and it is the first casino in New York City.(Harwood, 2011) In fact, GentingBhdhas beaten out MGM Resorts International’s original proposal to build a casino at Aqueduct Racetrack in South Ozone Park.(Mosco, 2012)However, Resorts World Casino New York City is still in competition with MGM Resorts International which is holding a certain number of casinos in Las Vegas and also outside of Las Vegas such as MGM Grand, The Mirage, New York-New York and more.GentingBhd may lose their advantage if compare with MGM Resorts International because of their brand name is not recognized by people. In past few years, Genting Bhd has bought 3.2% stake in MGM Mirage and Genting Bhd took over the US casino operator’s investment in MGM Grand Macau.(Times, 2009)In fact, GentingBhdisholding more cash than any other gaming operators in the world and it is one of the advantages of GentingBhd in the competition.
Resort World Genting monopolizes casino market in Malaysia and it ensures the profitability of Resort World Genting. However, there are various resorts in local compete with Resort World Genting such as Legoland Malaysia in Johor.Legoland Malaysia is owned by Merlin Entertainments and it was opened on 22nd September 2012. Legoland Malaysia is the first Legoland theme park in Asia and it attracts not only local visitors, and also foreign visitors especially Singaporean.(Wikipedia, Legoland Malaysia) In addition, the Legoland Hotel, Lego-themed water theme park and Lego-themed attractions nearby will be opening soon. It becomes one of the potential competitors of Resort World Genting.
In conclusion, Las Vegas Sands, MGM Resorts International and Merlin Entertainments are mainly competitors of GentingBhd. A good competition will lead a better performance of a company. Thus, we have a high expectation for GentingBhd.
(604 words)
(c) Risk factors of the industry
The leisure and hospitality industry is expected to assume a greater role in driving economic growth during this decade. It is a business that providing goods and services in terms of entertainment, recreation and tourism. Leisure and hospitality industry is also assisting in the contribution of the gross domestic product (GDP) by creating job opportunities. (Economywatch.com, 2010) With the rapidly expansion of leisure and hospitality industry, there are general risks encountered by the companies. Therefore, managing risks is became an indispensible issue for every company. There are several sources of risk which are market risk, credit risk, interest rate risk, and so on. These risk factors are largely beyond the control of the Company and its directors because of the nature of the activities of the Company.#p#分頁標題#e#
a. Market Risk
The fluctuations in the aggregate market assist the variability in a security’s return. Unfavourable economic growth such as high unemployment, recessions, or other unexpected events like war and natural disaster affect to the entire market and lead to the occurrence of market risk. Due to the economic changes, the value of investments may reduced over a given time period. It is also called as systematic risk. (investorwords.com, 2013) In order to protect against market risk, asset allocation and diversification can be used because different portions of the market tend to underperform at different times.
As a fact, a total of 64 projects were approved with total investments of RM1.9 billion in the hotels and tourism subsector in 2011. Domestic investments totalled RM1.8 billion (94.7%), while foreign investments amounted to RM63.1 million (5.3%). In comparison, investments approved in the hotels and tourism sub-sector in 2010 amounted to RM2.5 billion, most of them were domestic investments. Amount of investment is reduced about RM 0.7 billion from 2010 to 2011 due to the economic crisis. (MIDA, 2011)
b. Credit risk
Exposure to credit risk in leisure and hospitality industry arises mainly from sales made on deferred credit terms, cash and cash equivalents, deposits with financial institutions, money market instruments and debt securities. (Genting Berhad, 2011) The companies which allow customers to pay in credit terms would encounter credit risk as including lost principal and interest, increased collection costs, and disruption to cash flows. The loss can arise in a number of circumstances. It is closely related to the potential return of an investment. (Investopedia.com, 2013)
Risks are minimized through effective monitoring of receivables and suspension of sales to customers whose accounts exceed the stipulated credit terms. Credit limits are set and credit history is reviewed to minimize potential losses. Credit risk is closely tied to the potential return of an investment, the most notable being that the yields on bonds correlate strongly to their perceived credit risk. (Genting Berhad, 2011)
c. Currency Risk
Currency risk is the risk that fluctuation of the fair value or future cash flows of a financial instrument caused by changes in foreign currency rates. (BERJAYA, 2011) Most of the companies invest internationally in global investment arena therefore they face currency risk when they convert the foreign gains back to own currency. For example, Genting Berhad and Berjaya Corporation Berhad contribute their leisure and hospitality business in other countries such as Singapore and United Kingdom. They are exposed to various currencies. Due to the uncertainty of currency, they confront currency risk when they change the earnings to Ringgit Malaysia. Foreign currency exchange rates can change an investor's total return on a foreign investment significantly, despite how well the investment performed. Some companies attempts to significantly limit its exposure for committed transactions by entering into forward foreign currency exchange contracts within the constraints of market and government regulations. (Genting Berhad, 2011)#p#分頁標題#e#
d. Interest Rate Risk
Interest rate risk is the risk of variability in a cash flow or security of company which resulting from changes in the interest rate level. (moneyterms.co.uk, 2012) It arises mainly from the company’s borrowings and debt securities classified as fair value through profit or loss and available-for-sale financial assets. Borrowings issued at variable rates expose the company to cash flow interest rate risk. Debt securities at fixed rate expose the company to fair value interest rate risk. (Genting Berhad, 2011) The interest bearing assets are made up of deposits with licensed financial institutions, staff loans and interest bearing receivables. It generally affects securities inversely which showing that security price move inversely to interest rates.
To reduce interest rate risk, some companies manage its interest rate risk exposure from interest bearing borrowings by maintaining rate borrowings of fixed and floating. They actively review the debt portfolio, taking into account the investment holding period and nature of assets. This strategy allows them to capitalize on cheaper funding in a low interest rate environment and achieve a certain level of protection against rate hikes.
e. Liquidity Risk
Liquidity risk is the risk that a given security or asset cannot be bought or sold rapidly in the market to prevent a loss. Liquidity risk arises when a company interested in trading an asset but unable to do it because nobody in the market wants to trade it. The more uncertainty of time and price, the greater the liquidity risk. It becomes quite important to companies who are about to hold or currently hold an asset, since it affects their ability to trade. (Wikipedia, 2013) Liquidity risk causes company encounter difficulty in meeting financial obligation due to the shortage of funds.
In order to minimize liquidity risk, some companies manage their operating cash flows and the availability of fund so as to ensure that all funding needs are met. As part of their overall prudent liquidity management, companies may also maintain adequate levels of cash or cash convertible investments to meet their working capital requirements. In addition, companies strive to maintain available banking facilities at reasonable level to their overall debt position. As far as possible, companies raise committed funding from both capital markets and financial institutions and prudently balances their portfolio with some short term funding so as to achieve overall cost effectiveness. (BERJAYA, 2011)
(d) Industry performance as compared to the general economy for the last 3 years
As we all noticed, the economic decline was registered in several countries in 2009 such as United States, Euro area, Japan, Singapore and also Malaysia as the global financial crisis was led to a sharp contraction of the global economy.GDP growth rate in Malaysian economy contracted by 1.7 per cent due to a significant drop in manufacturing sector and mining & quarrying sector shrank, which is 9.4 per cent and 3.8 per cent.(Centre F.G ,2011)#p#分頁標題#e#
Leisure and hospitality industrymakes an important contribution to the general economy. It is because it provides a large share of employment opportunity for the world. It included the careers in particular specialist areas such as marketing, human resource, finance and accounting, or business management. This can evident by employment in the leisure and hospitality industry for the entire world was 13.2 million in September 2009 and accounted for 12.4 percent of private industry employment. (Bureau of labor statistics) Leisure and hospitality services include a wide variety of activities that attract tourists such as entertaining recreational areas, resorts, concerts and sporting events, restaurants, and accommodations. (Bureau of labor statistics).Leisure and hospitality industry performance consider at the good level in 2009 although the GDP growth rate is negative. This statement can be proof by the performance of Gentingbhd, which is the example of the leisure and hospitality in Malaysia. Based on the annual report 2009 of Gentingbhd, leisure and hospitality division had higher volume of business generated led to the higher revenue contribution from Resorts World Genting (“RWG”). Besides that, the annual report show that the performance of the integrated resort of Gentingbhd in 2009 was better than last year 2008, which was received 19.5 million visitors in 2009 compared with 2008 was 19.2 million. Resorts World Genting operates 41 of a total of 133 outlets in 2009 and the outlets catered to a record high of more than 14.4 million covers in 2009 as compared with 2008 was 13.7 million. (Gentingberhad annual report,2009) However there are some hotel in Malaysia are struggling to tackle the problem of declined occupancy rate in 2009. Therefore they were implemented some creative and innovative ways to attract their guests and earn their confidence once again.
GDP growth rate of the Malaysian economy in 2010 expanded by 7.2percentage compared with the economy contracted by 1.7percentage in last year 2009. The expanded GDP growth rate due to significant grew of the two largest segments which play an important role in the overall economy. There are economy services and manufacturing, which grew by 6.8% and 11.4%. (Malaysia economy update, 2011)Tourism is one of the main drivers of the growth of the leisure and hospitality industry in Malaysia. Malaysia saw 24.6 million tourist arrivals in 2010. The development of the tourism will definitely leads to the drastically expanding of the leisure and hospitality in 2010. The number of hotels has expanded from 1,492 in 2009 to 2,256 in 2010, which was rose by 37.3 percent.(Ninth Malaysian Plan 2006-2010). 2010 was an active year for leisure and hospitality industry like Genting Malaysia as it took concrete steps towards expanding in the UK and in USA. This action guide the Genting Malaysia to have the largest number of casinos in the UK with 46 casinos as at 31 December 2010 and five premier casinos located in London. ( Gentingberhad annual report,2010 )#p#分頁標題#e#
2011 saw the world facing unexpected crisis in many countries before the global financial crisis of the preceding years could dissipate. These unprecedented crisis such as the tsunami in Japan, major floods in Thailand, devastating earthquakes, the Euro-zone sovereign debt crisis and the Arab Spring revolutions. These factors had financially impacted many industries and corporations globally. Therefore, the annual GDP growth rate of Malaysia economy was drop to 5.1percentage, rather drastic drop against the 7.2percentage in 2010. (Malaysia economy update, 2011) This year was tough and challenge time for leisure and hospitality industry. However, some leisure and hospitality industry in Malaysia like Gentingbhd had marked this year as the official opening of Southeast Asia’s first Universal Studios Singapore at Resorts World Sentosa, the official opening of Johor Premium Outlets in Malaysia which is Southeast Asia’s first Premium Outlet Center and the launch of Resorts World Casino New York City in the United States of America although the economy remains uncertain. (Gentingbhd annual report, 2011) Besides that, the first Legoland Malaysia was announced on 6 December of 2011 to open Legoland theme park in Asia-Pacific and the sixth in the world. (Lua,M.L,2011 ).
GROSS DOMESTIC PRODUCT GROWTH OF MALAYSIA, 2009 – 2011 (%)
(Ministry of International Trade and Industry (MITI) Malaysia, 2011)
(e) Prospect and estimated growth for the industry in the coming year.
Nowadays, organizations within leisure and hospitality industry are faced with increasingly complex issues on branding, operational excellence and growth. There are many accompanying societal changes with great significance for the industry’s operators. Demand and consumer expectations have continued to expand with the evolution of a global marketplace. (Background to the hospitality industry’s workforce, 2010)
From international perspective, leisure and hospitality industry is now claimed to be the world’s fastest growing industry and also one of the leading earners of foreign currency. Nationwide employment in the leisure and hospitality sector rose to 13.66 million jobs in August, based on the latest seasonally adjusted data from the U.S. Bureau of Labour Statistics. This means many people willing to engage in this industry as they maybe forecast it might be a flourished result in the future. (Thomas)
However, the UK and other western economies are going through a prolonged period of structural adjustment and relatively low growth and volatility is likely to persist through the mid-2010s. Against this disappointing backdrop, the London hotel market has demonstrated remarkable resilience. Revenue per room dipped by 5% in 2009, but has since rebounded by 25% to reach a record high. The surge in new supply during 2012 and 2013 may bring down occupancy but we do not expect these temporary factors to hold London back for long. In the UK regions, the picture is different. Here demand is more dependent on the domestic economy, which has been squeezed by high inflation and the aftermath of the financial crisis. Despite near 70% occupancy rates, hoteliers have been unable to pass price increases through the market. We expect revenue per room and rates to remain broadly flat in 2013, as they have since 2009. (UK hotels forecast 2013)#p#分頁標題#e#
Figure 1.1 Forecast charts Leisure and Hospitality in 2013 (PwC UK hotel forecast 2012 and 2013)
From Malaysia perspective, GentingBerhad is the domain in hospitality and leisure industry. Casino, hotel and theme park are the main sectors which contributed by GentingBerhad. Thus, we exert GentingBerhad as the standard to interpret the prospect of Malaysia. Among the mass market domestic visitors,The total visitor arrivals to Genting Highlands remained stable. Unlike Singapore, where gaming volume is volatile, Malaysian gaming volume held up well growing at double-digits for VIP gaming and mid single-digit for mass market gaming. As such, Genting Malaysia with 83% of its revenue generated frm its stable Malaysian gaming base - provides greater earnings compared with GentingBerhad, which is facing greater earning volatility from Genting Singapore which contributes a sizeable 55% of GentingBerhad’s group profit while the operating environment in Singapore remains challenging given its heavy reliance on VIP gaming, which is feeling the impact of the global economic slowdown as well as regulatory restrictions on full-fledged junket operations in Singapore. (2013 STRATEGY - GAMING (OVERWEIGHT), 2013)
While another evidence to proof that the hospitality and leisure industry is in a high profitability industry, is according to Tourism Malaysia statistics, tourist arrivals to Malaysia rose 3.9% to 12.8 million in the first seven months of the year against 12.4 million in the previous corresponding period. For the first six months, tourist arrivals in Sabah grew by 1.2% to 1.12 million compared with 1.11 million in 2007. (The STAR, 30 Aug 2008).Tourism always related to the hospitality and leisure industry, each other is complementary. So with the gaining figure, it apparently pushed up the industry to the climax.
Question 3
In conclusion, we will suggest investors invest in Genting Berhad stock. There are some analysis and evidences support our point of view. In our analysis, the P/E ratio of Genting Berhad is 16.90 times. If compare with Malaysia gaming industry P/E ratio – 13.8 times (Based on Kenanga Research, 22 November 2012), it is considered high. Moreover, the latest P/E ratio is also higher than 2011 year which is either 14.1 (Based on Kenanga Research, 22 November 2012) or 13.6 (Based on OSK Research, 22 November 2012). Apparently, increasing in P/E ratio reflects that investors expect Genting Berhad will outperform in the following years. It tells us that investors have confidence and high expectation on Genting Berhad’s future. On the other hand, the estimated dividend growth rate of Genting Berhad is 3.54%. It seems like not much attractive to investor since Genting Berhad pays a low dividend. However, it is a signal of growing for company so that investors can expect to make more money by investing in Genting Berhad stock in following years. In the calculation of estimated Genting Berhad share price, we got an extremely low price which is RM0.65. It is a huge range of extent from current price – RM9.70 (Retrieved on 7th January 2013). However, it does not indicate that we should not invest in Genting Berhad. In our opinion, the dividend discount model formula is not suitable to apply in here. It is because Genting Berhad gives a very low dividend while its share price is greatly high. Therefore, the estimated share price in result will be tremendously small. In a word, the unrealistic estimated share price as above is meaningless. In addition, the Kenanga research and OSK research has rated the Genting Berhad as outperform or valuable to buy. Moreover, both of the researches predict the share price of Genting Berhad will be raised to around RM10 whereas the current price of Genting Berhad is RM9.70. (Retrievedon 7th January 2013) Obviously, it shows that Genting Berhad is still valuable for investor to invest.#p#分頁標題#e#
Genting Berhad has a dividend yield of 0.652% which is considered less attractive. However, this is one of the strategies of them to reduce expenses in order to contribute in their business expansion. It was announced that Genting Berhad is venturing into pharmaceuticals. A wholly-owned subsidiary of Genting Berhad, Genting Management (Singapore) Pte Ltd had invested USD31.5m in TauRx Pharmaceuticals Ltd. We believe it may bring impact to the stock price of Genting Berhad because they try to get involved in more sectors in market.
ROE of Genting Berhad was fluctuated and was declined from 2011 to 2012. The fall of net profit margin, asset turnover ratio and leverage ratio had caused the declining of ROE. Even though higher ROE is preferable, but ROE may decrease due to some circumstances. The drop of proportionate profitability may assist the rising in corporate income and hence decreasing in net after tax profits. Earnings may still growing but ROE would decrease. When Genting Berhad prefer to become more asset intensive, which means that the company has to generate more assets to increase sales, ROE will decrease despite growing earnings. If the company is paying down its debt by shareholders equity, equity multiplier will decline, ROE will decrease intensely. Therefore we should compare with other parameter.
As we know that Genting Berhad is the blue chip company, it indicates that the stock price of a Genting Berhad usually follows the S&P 500 and normally it will not have a big fluctuated in the changing of share price. Based on the earning per share (EPS) as we estimated above, it shows the EPS of Genting Berhad will grow from 54.4267cent to 56.4490cent. Therefore it means the company’s profitability will remain at the high level for next year. The growing EPS also indicate that the performance of the company will keep improving in the future. It will lead to the value of the Genting Berhad share grow up in the future. Therefore we suggest the investor to invest in Genting Berhad.
Besides that, we estimate that the growth of the Genting Berhad from 2012 to next year 2013 is 13.0844%. It tells us that the Genting Berhad is going to grow in the coming year although the uncertainty economy changes. Genting Berhad is not only concentrate in its leisure and hospitality industry, it also included gaming and entertainment businesses, plantation, the generation and supply of electric power, tours and travel related services. It involved some development like property development and management, genomics research and development, oil and gas exploration, production activities. (Investor.com, 2010-2012). This is definitely shows the strength and advantage of the diversity of Genting Berhad. As we all noticed that the leisure and hospitality or gaming entertainment industry are growing very fast in the current economy. If unfortunately one of these industry’s performance goes down, it still can recover by others industry which have a constantly good performance over past years. Genting Berhad already is a well-known company in Malaysia, the total visitors is remained stable and keep increasing. Although every year is challenger for Genting Berhad, they can always do their performance well until reach the expectation of the investors.#p#分頁標題#e#
The other evidence is the increasing of their dividend payout ratio. We estimate that the dividend payout ratio will keep increasing to 11.024% next year. It means how well the earnings of Genting Berhad can support its dividend payments to the shareholders. This higher payout ratio will only given by the mature company. (investopedia, 2013) Therefore, the shareholders of the Genting Berhad can enjoy its increasing dividend per share every.
All of the evidence can definitely support the investor to invest in Genting Berhad.
自20世紀中葉以來，經歷了許多經濟的沉浮，世界的先驅看到了許多基本和深遠的社會變化。顯而易見的是隨著經濟財富的改善，生活和工作在這些國家的所有人們已經開始考慮改善生活水平。這些改善增強了改進了的生產力和再分配的勞動力。
不僅在馬來西亞，在大多數的國家，休閑和酒店業已經成為工業不可或缺的一部分，而這有助于改善經濟財富。它可以當作旅游產業的互補。因為它是一個利用國家資源作為收入來源來吸引外國人來并且蓬勃其他行業的發展。例如，游客飛越馬來西亞這使得我們有機會摸索新的投資方式并且嘗試涉及它，這可能幫助我們由于流入貨幣而使得經濟增長。
但首先，休閑和酒店業究竟是什么？這個部分是由兩部門組成，藝術娛樂休閑部門和住宿食品服務行業。
Background Of The Industry Economics Essay
Since the middle of the twentieth century, many economic goes ups and downs, the pioneer of the world have seen many fundamental and far-reaching changes within society. The obvious view is the amelioration in economic wealth, has considered the improvements in standards of living for the ensemble of people living and working in these countries. These alterations have enhanced the improved productivity and redistribution of the workforce.
Leisure and Hospitality industry has become part of integral industries that helps to improve in economic wealth, not only in Malaysia but in most countries. It can regard as a complementary of tourism industry. As it is an income generator by using sources of country to attract foreigners to come over and flourish other industries too. For instances, tourists who fly over Malaysia will have an opportunity to fumble a new investment and attempt to involve it, this might help our economy grow well because of the inflow currency injection.
But first, what exactly is leisure and hospitality industry? This sector is made up of two parts, which are the arts, entertainment and recreation sector and accommodation and food service sector. The arts, entertainment, and recreation sector include a vast range of constructions that operate facilities or services provided to cater variety of cultural, entertainment, and recreational interests of their patrons, examples like theme park, shopping mall, theme museum. (Leisure and Hospitality Industry)For the most part, it is built luxury-based, evade from the fundamental needs. While the accommodation and food services sector comprises constructions providing customers with lodging and preparing meals, snacks, and beverages for consumption, examples like famous food, hotel with different rated and superior services.This service-based industry thrives on the leisure activities of patrons. This kind of business that the hospitality industry garners is momentary, but it accounts a large sum of its revenue. Therefore, with the subtle leisure and hospitality industry will push the tourism industry up. (What Is the Hospitality Industry?)#p#分頁標題#e#
Leisure and hospitality industry had indirectly developed in so many aspects too such as land, country, other businesses and it also decrease the unemployment rate too. For the land development, hospitality experts did a good job of flourishing some unused spaces and built a glamorous building on it to accommodate tourist that need place to stay and obtain income from that way. With the phosphorous of hospitality industry, there have few rates of hotels for tourist to choose whether which will appropriate for them. For examples, Genting Highland Malaysia has a few different rate of hotel in the small same site to let the tourists have as much as choices to select their apposite hotels.
For the development of other businesses, such as food, stores, theme parks and shopping malls will glowing too due to the intrude of leisure and hospitality industry. In contra versa, tourists maybe interesting in food or theme park or cultures of a country and tend to come over for that specific intention, this will also enhance the leisure and hospitality industry. For an actual example, Singapore recently has constructed a new theme park, Universal Studio and Casino have attracted a lot of foreigners spend their time in that country to regale themselves. Exceptional service is usually very important for. Customer satisfaction like what they purposely come for, usually leads to consumer loyalty, which helps to ensure the success of a company in the hospitality industry.
For the development of country and decreasing the unemployment rate, leisure and hospitality has create an opportunity for the tourist to search a new investment as I said in the above paragraph and it has fill in the people that need a job.
In conclusion, hospitality and leisure industry are so sensitive to economic and in competitive market conditions. Hospitality and Leisure companies have to cater the challenges of current world market by comprehending and arising strategies to meet economic conditions, consumer trends, competition, technology and concerns regarding security and social responsibility. (646 words)
(b)Main Competitors in the Industry
As we know, GentingBhdis a well-known corporation in Malaysia with its prosperous and successful hotel, resort as well asleisure industry.Moreover, hospitality and leisure is the main revenue for GentingBhd. Therefore, we will emphasize the hospitality and leisure segments in here. In fact, the only one large casino space in Malaysia is built in Resorts World Genting which means GentingBhd monopolizes the casino market in Malaysia as well. However, the GentingBhd is having a tough competition with several rivals in overseas casino market. Besides that, GentingBhdcompetes perfectly with other resorts and hotels nationally, regionally and also globally. Therefore, there are few competitors in hospitality and leisure industry that GentingBhd might beware.
Las Vegas Sandsis one of the main competitors for GentingBhd. Recently, it developed Marina Bay Sands in Singapore and it is the most expensive standalone casino property in the world. With its distinctive and marvel architecture of the resort – the Sands Skypark and also the amazing and luxury interior of the casino, it does attract many gamblersglobally which gives an impact to Resorts World Sentosa in Singapore. (Acura, 2010)Resorts World Sentosa is one of the resort and casino properties of GentingBhd. It is one of the most expensive casino properties in the world after Marina Bay Sands.(Wikipedia, Resorts World Sentosa) Indeed, the third quarterly reports in 2010 shows that opening of Marina Bay Sands has wiped out the gaming revenueof Resorts World Sentosa in the second quarter. (Cohen, 2010)It obviously indicates that Resorts World Sentosa have a perfect competition with Marina Bay Sands.#p#分頁標題#e#
In other hand, GentingBhd is also competing with MGM Resorts International, the Las Vegas-based casino company in global casino market.(Reuters, 2012) Resorts World Casino New York City is builtat Aqueduct Racetrack in New York City, USAby GentingBhd which was opened on 28th October 2011 and it is the first casino in New York City.(Harwood, 2011) In fact, GentingBhdhas beaten out MGM Resorts International’s original proposal to build a casino at Aqueduct Racetrack in South Ozone Park.(Mosco, 2012)However, Resorts World Casino New York City is still in competition with MGM Resorts International which is holding a certain number of casinos in Las Vegas and also outside of Las Vegas such as MGM Grand, The Mirage, New York-New York and more.GentingBhd may lose their advantage if compare with MGM Resorts International because of their brand name is not recognized by people. In past few years, Genting Bhd has bought 3.2% stake in MGM Mirage and Genting Bhd took over the US casino operator’s investment in MGM Grand Macau.(Times, 2009)In fact, GentingBhdisholding more cash than any other gaming operators in the world and it is one of the advantages of GentingBhd in the competition.
Resort World Genting monopolizes casino market in Malaysia and it ensures the profitability of Resort World Genting. However, there are various resorts in local compete with Resort World Genting such as Legoland Malaysia in Johor.Legoland Malaysia is owned by Merlin Entertainments and it was opened on 22nd September 2012. Legoland Malaysia is the first Legoland theme park in Asia and it attracts not only local visitors, and also foreign visitors especially Singaporean.(Wikipedia, Legoland Malaysia) In addition, the Legoland Hotel, Lego-themed water theme park and Lego-themed attractions nearby will be opening soon. It becomes one of the potential competitors of Resort World Genting.
In conclusion, Las Vegas Sands, MGM Resorts International and Merlin Entertainments are mainly competitors of GentingBhd. A good competition will lead a better performance of a company. Thus, we have a high expectation for GentingBhd.
(604 words)
(c) Risk factors of the industry
The leisure and hospitality industry is expected to assume a greater role in driving economic growth during this decade. It is a business that providing goods and services in terms of entertainment, recreation and tourism. Leisure and hospitality industry is also assisting in the contribution of the gross domestic product (GDP) by creating job opportunities. (Economywatch.com, 2010) With the rapidly expansion of leisure and hospitality industry, there are general risks encountered by the companies. Therefore, managing risks is became an indispensible issue for every company. There are several sources of risk which are market risk, credit risk, interest rate risk, and so on. These risk factors are largely beyond the control of the Company and its directors because of the nature of the activities of the Company.#p#分頁標題#e#
a. Market Risk
The fluctuations in the aggregate market assist the variability in a security’s return. Unfavourable economic growth such as high unemployment, recessions, or other unexpected events like war and natural disaster affect to the entire market and lead to the occurrence of market risk. Due to the economic changes, the value of investments may reduced over a given time period. It is also called as systematic risk. (investorwords.com, 2013) In order to protect against market risk, asset allocation and diversification can be used because different portions of the market tend to underperform at different times.
As a fact, a total of 64 projects were approved with total investments of RM1.9 billion in the hotels and tourism subsector in 2011. Domestic investments totalled RM1.8 billion (94.7%), while foreign investments amounted to RM63.1 million (5.3%). In comparison, investments approved in the hotels and tourism sub-sector in 2010 amounted to RM2.5 billion, most of them were domestic investments. Amount of investment is reduced about RM 0.7 billion from 2010 to 2011 due to the economic crisis. (MIDA, 2011)
b. Credit risk
Exposure to credit risk in leisure and hospitality industry arises mainly from sales made on deferred credit terms, cash and cash equivalents, deposits with financial institutions, money market instruments and debt securities. (Genting Berhad, 2011) The companies which allow customers to pay in credit terms would encounter credit risk as including lost principal and interest, increased collection costs, and disruption to cash flows. The loss can arise in a number of circumstances. It is closely related to the potential return of an investment. (Investopedia.com, 2013)
Risks are minimized through effective monitoring of receivables and suspension of sales to customers whose accounts exceed the stipulated credit terms. Credit limits are set and credit history is reviewed to minimize potential losses. Credit risk is closely tied to the potential return of an investment, the most notable being that the yields on bonds correlate strongly to their perceived credit risk. (Genting Berhad, 2011)
c. Currency Risk
Currency risk is the risk that fluctuation of the fair value or future cash flows of a financial instrument caused by changes in foreign currency rates. (BERJAYA, 2011) Most of the companies invest internationally in global investment arena therefore they face currency risk when they convert the foreign gains back to own currency. For example, Genting Berhad and Berjaya Corporation Berhad contribute their leisure and hospitality business in other countries such as Singapore and United Kingdom. They are exposed to various currencies. Due to the uncertainty of currency, they confront currency risk when they change the earnings to Ringgit Malaysia. Foreign currency exchange rates can change an investor's total return on a foreign investment significantly, despite how well the investment performed. Some companies attempts to significantly limit its exposure for committed transactions by entering into forward foreign currency exchange contracts within the constraints of market and government regulations. (Genting Berhad, 2011)#p#分頁標題#e#
d. Interest Rate Risk
Interest rate risk is the risk of variability in a cash flow or security of company which resulting from changes in the interest rate level. (moneyterms.co.uk, 2012) It arises mainly from the company’s borrowings and debt securities classified as fair value through profit or loss and available-for-sale financial assets. Borrowings issued at variable rates expose the company to cash flow interest rate risk. Debt securities at fixed rate expose the company to fair value interest rate risk. (Genting Berhad, 2011) The interest bearing assets are made up of deposits with licensed financial institutions, staff loans and interest bearing receivables. It generally affects securities inversely which showing that security price move inversely to interest rates.
To reduce interest rate risk, some companies manage its interest rate risk exposure from interest bearing borrowings by maintaining rate borrowings of fixed and floating. They actively review the debt portfolio, taking into account the investment holding period and nature of assets. This strategy allows them to capitalize on cheaper funding in a low interest rate environment and achieve a certain level of protection against rate hikes.
e. Liquidity Risk
Liquidity risk is the risk that a given security or asset cannot be bought or sold rapidly in the market to prevent a loss. Liquidity risk arises when a company interested in trading an asset but unable to do it because nobody in the market wants to trade it. The more uncertainty of time and price, the greater the liquidity risk. It becomes quite important to companies who are about to hold or currently hold an asset, since it affects their ability to trade. (Wikipedia, 2013) Liquidity risk causes company encounter difficulty in meeting financial obligation due to the shortage of funds.
In order to minimize liquidity risk, some companies manage their operating cash flows and the availability of fund so as to ensure that all funding needs are met. As part of their overall prudent liquidity management, companies may also maintain adequate levels of cash or cash convertible investments to meet their working capital requirements. In addition, companies strive to maintain available banking facilities at reasonable level to their overall debt position. As far as possible, companies raise committed funding from both capital markets and financial institutions and prudently balances their portfolio with some short term funding so as to achieve overall cost effectiveness. (BERJAYA, 2011)
(d) Industry performance as compared to the general economy for the last 3 years
As we all noticed, the economic decline was registered in several countries in 2009 such as United States, Euro area, Japan, Singapore and also Malaysia as the global financial crisis was led to a sharp contraction of the global economy.GDP growth rate in Malaysian economy contracted by 1.7 per cent due to a significant drop in manufacturing sector and mining & quarrying sector shrank, which is 9.4 per cent and 3.8 per cent.(Centre F.G ,2011)#p#分頁標題#e#
Leisure and hospitality industrymakes an important contribution to the general economy. It is because it provides a large share of employment opportunity for the world. It included the careers in particular specialist areas such as marketing, human resource, finance and accounting, or business management. This can evident by employment in the leisure and hospitality industry for the entire world was 13.2 million in September 2009 and accounted for 12.4 percent of private industry employment. (Bureau of labor statistics) Leisure and hospitality services include a wide variety of activities that attract tourists such as entertaining recreational areas, resorts, concerts and sporting events, restaurants, and accommodations. (Bureau of labor statistics).Leisure and hospitality industry performance consider at the good level in 2009 although the GDP growth rate is negative. This statement can be proof by the performance of Gentingbhd, which is the example of the leisure and hospitality in Malaysia. Based on the annual report 2009 of Gentingbhd, leisure and hospitality division had higher volume of business generated led to the higher revenue contribution from Resorts World Genting (“RWG”). Besides that, the annual report show that the performance of the integrated resort of Gentingbhd in 2009 was better than last year 2008, which was received 19.5 million visitors in 2009 compared with 2008 was 19.2 million. Resorts World Genting operates 41 of a total of 133 outlets in 2009 and the outlets catered to a record high of more than 14.4 million covers in 2009 as compared with 2008 was 13.7 million. (Gentingberhad annual report,2009) However there are some hotel in Malaysia are struggling to tackle the problem of declined occupancy rate in 2009. Therefore they were implemented some creative and innovative ways to attract their guests and earn their confidence once again.
GDP growth rate of the Malaysian economy in 2010 expanded by 7.2percentage compared with the economy contracted by 1.7percentage in last year 2009. The expanded GDP growth rate due to significant grew of the two largest segments which play an important role in the overall economy. There are economy services and manufacturing, which grew by 6.8% and 11.4%. (Malaysia economy update, 2011)Tourism is one of the main drivers of the growth of the leisure and hospitality industry in Malaysia. Malaysia saw 24.6 million tourist arrivals in 2010. The development of the tourism will definitely leads to the drastically expanding of the leisure and hospitality in 2010. The number of hotels has expanded from 1,492 in 2009 to 2,256 in 2010, which was rose by 37.3 percent.(Ninth Malaysian Plan 2006-2010). 2010 was an active year for leisure and hospitality industry like Genting Malaysia as it took concrete steps towards expanding in the UK and in USA. This action guide the Genting Malaysia to have the largest number of casinos in the UK with 46 casinos as at 31 December 2010 and five premier casinos located in London. ( Gentingberhad annual report,2010 )#p#分頁標題#e#
2011 saw the world facing unexpected crisis in many countries before the global financial crisis of the preceding years could dissipate. These unprecedented crisis such as the tsunami in Japan, major floods in Thailand, devastating earthquakes, the Euro-zone sovereign debt crisis and the Arab Spring revolutions. These factors had financially impacted many industries and corporations globally. Therefore, the annual GDP growth rate of Malaysia economy was drop to 5.1percentage, rather drastic drop against the 7.2percentage in 2010. (Malaysia economy update, 2011) This year was tough and challenge time for leisure and hospitality industry. However, some leisure and hospitality industry in Malaysia like Gentingbhd had marked this year as the official opening of Southeast Asia’s first Universal Studios Singapore at Resorts World Sentosa, the official opening of Johor Premium Outlets in Malaysia which is Southeast Asia’s first Premium Outlet Center and the launch of Resorts World Casino New York City in the United States of America although the economy remains uncertain. (Gentingbhd annual report, 2011) Besides that, the first Legoland Malaysia was announced on 6 December of 2011 to open Legoland theme park in Asia-Pacific and the sixth in the world. (Lua,M.L,2011 ).
GROSS DOMESTIC PRODUCT GROWTH OF MALAYSIA, 2009 – 2011 (%)
(Ministry of International Trade and Industry (MITI) Malaysia, 2011)
(e) Prospect and estimated growth for the industry in the coming year.
Nowadays, organizations within leisure and hospitality industry are faced with increasingly complex issues on branding, operational excellence and growth. There are many accompanying societal changes with great significance for the industry’s operators. Demand and consumer expectations have continued to expand with the evolution of a global marketplace. (Background to the hospitality industry’s workforce, 2010)
From international perspective, leisure and hospitality industry is now claimed to be the world’s fastest growing industry and also one of the leading earners of foreign currency. Nationwide employment in the leisure and hospitality sector rose to 13.66 million jobs in August, based on the latest seasonally adjusted data from the U.S. Bureau of Labour Statistics. This means many people willing to engage in this industry as they maybe forecast it might be a flourished result in the future. (Thomas)
However, the UK and other western economies are going through a prolonged period of structural adjustment and relatively low growth and volatility is likely to persist through the mid-2010s. Against this disappointing backdrop, the London hotel market has demonstrated remarkable resilience. Revenue per room dipped by 5% in 2009, but has since rebounded by 25% to reach a record high. The surge in new supply during 2012 and 2013 may bring down occupancy but we do not expect these temporary factors to hold London back for long. In the UK regions, the picture is different. Here demand is more dependent on the domestic economy, which has been squeezed by high inflation and the aftermath of the financial crisis. Despite near 70% occupancy rates, hoteliers have been unable to pass price increases through the market. We expect revenue per room and rates to remain broadly flat in 2013, as they have since 2009. (UK hotels forecast 2013)#p#分頁標題#e#
Figure 1.1 Forecast charts Leisure and Hospitality in 2013 (PwC UK hotel forecast 2012 and 2013)
From Malaysia perspective, GentingBerhad is the domain in hospitality and leisure industry. Casino, hotel and theme park are the main sectors which contributed by GentingBerhad. Thus, we exert GentingBerhad as the standard to interpret the prospect of Malaysia. Among the mass market domestic visitors,The total visitor arrivals to Genting Highlands remained stable. Unlike Singapore, where gaming volume is volatile, Malaysian gaming volume held up well growing at double-digits for VIP gaming and mid single-digit for mass market gaming. As such, Genting Malaysia with 83% of its revenue generated frm its stable Malaysian gaming base - provides greater earnings compared with GentingBerhad, which is facing greater earning volatility from Genting Singapore which contributes a sizeable 55% of GentingBerhad’s group profit while the operating environment in Singapore remains challenging given its heavy reliance on VIP gaming, which is feeling the impact of the global economic slowdown as well as regulatory restrictions on full-fledged junket operations in Singapore. (2013 STRATEGY - GAMING (OVERWEIGHT), 2013)
While another evidence to proof that the hospitality and leisure industry is in a high profitability industry, is according to Tourism Malaysia statistics, tourist arrivals to Malaysia rose 3.9% to 12.8 million in the first seven months of the year against 12.4 million in the previous corresponding period. For the first six months, tourist arrivals in Sabah grew by 1.2% to 1.12 million compared with 1.11 million in 2007. (The STAR, 30 Aug 2008).Tourism always related to the hospitality and leisure industry, each other is complementary. So with the gaining figure, it apparently pushed up the industry to the climax.
Question 3
In conclusion, we will suggest investors invest in Genting Berhad stock. There are some analysis and evidences support our point of view. In our analysis, the P/E ratio of Genting Berhad is 16.90 times. If compare with Malaysia gaming industry P/E ratio – 13.8 times (Based on Kenanga Research, 22 November 2012), it is considered high. Moreover, the latest P/E ratio is also higher than 2011 year which is either 14.1 (Based on Kenanga Research, 22 November 2012) or 13.6 (Based on OSK Research, 22 November 2012). Apparently, increasing in P/E ratio reflects that investors expect Genting Berhad will outperform in the following years. It tells us that investors have confidence and high expectation on Genting Berhad’s future. On the other hand, the estimated dividend growth rate of Genting Berhad is 3.54%. It seems like not much attractive to investor since Genting Berhad pays a low dividend. However, it is a signal of growing for company so that investors can expect to make more money by investing in Genting Berhad stock in following years. In the calculation of estimated Genting Berhad share price, we got an extremely low price which is RM0.65. It is a huge range of extent from current price – RM9.70 (Retrieved on 7th January 2013). However, it does not indicate that we should not invest in Genting Berhad. In our opinion, the dividend discount model formula is not suitable to apply in here. It is because Genting Berhad gives a very low dividend while its share price is greatly high. Therefore, the estimated share price in result will be tremendously small. In a word, the unrealistic estimated share price as above is meaningless. In addition, the Kenanga research and OSK research has rated the Genting Berhad as outperform or valuable to buy. Moreover, both of the researches predict the share price of Genting Berhad will be raised to around RM10 whereas the current price of Genting Berhad is RM9.70. (Retrievedon 7th January 2013) Obviously, it shows that Genting Berhad is still valuable for investor to invest.#p#分頁標題#e#
Genting Berhad has a dividend yield of 0.652% which is considered less attractive. However, this is one of the strategies of them to reduce expenses in order to contribute in their business expansion. It was announced that Genting Berhad is venturing into pharmaceuticals. A wholly-owned subsidiary of Genting Berhad, Genting Management (Singapore) Pte Ltd had invested USD31.5m in TauRx Pharmaceuticals Ltd. We believe it may bring impact to the stock price of Genting Berhad because they try to get involved in more sectors in market.
ROE of Genting Berhad was fluctuated and was declined from 2011 to 2012. The fall of net profit margin, asset turnover ratio and leverage ratio had caused the declining of ROE. Even though higher ROE is preferable, but ROE may decrease due to some circumstances. The drop of proportionate profitability may assist the rising in corporate income and hence decreasing in net after tax profits. Earnings may still growing but ROE would decrease. When Genting Berhad prefer to become more asset intensive, which means that the company has to generate more assets to increase sales, ROE will decrease despite growing earnings. If the company is paying down its debt by shareholders equity, equity multiplier will decline, ROE will decrease intensely. Therefore we should compare with other parameter.
As we know that Genting Berhad is the blue chip company, it indicates that the stock price of a Genting Berhad usually follows the S&P 500 and normally it will not have a big fluctuated in the changing of share price. Based on the earning per share (EPS) as we estimated above, it shows the EPS of Genting Berhad will grow from 54.4267cent to 56.4490cent. Therefore it means the company’s profitability will remain at the high level for next year. The growing EPS also indicate that the performance of the company will keep improving in the future. It will lead to the value of the Genting Berhad share grow up in the future. Therefore we suggest the investor to invest in Genting Berhad.
Besides that, we estimate that the growth of the Genting Berhad from 2012 to next year 2013 is 13.0844%. It tells us that the Genting Berhad is going to grow in the coming year although the uncertainty economy changes. Genting Berhad is not only concentrate in its leisure and hospitality industry, it also included gaming and entertainment businesses, plantation, the generation and supply of electric power, tours and travel related services. It involved some development like property development and management, genomics research and development, oil and gas exploration, production activities. (Investor.com, 2010-2012). This is definitely shows the strength and advantage of the diversity of Genting Berhad. As we all noticed that the leisure and hospitality or gaming entertainment industry are growing very fast in the current economy. If unfortunately one of these industry’s performance goes down, it still can recover by others industry which have a constantly good performance over past years. Genting Berhad already is a well-known company in Malaysia, the total visitors is remained stable and keep increasing. Although every year is challenger for Genting Berhad, they can always do their performance well until reach the expectation of the investors.#p#分頁標題#e#
The other evidence is the increasing of their dividend payout ratio. We estimate that the dividend payout ratio will keep increasing to 11.024% next year. It means how well the earnings of Genting Berhad can support its dividend payments to the shareholders. This higher payout ratio will only given by the mature company. (investopedia, 2013) Therefore, the shareholders of the Genting Berhad can enjoy its increasing dividend per share every.
All of the evidence can definitely support the investor to invest in Genting Berhad.
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