Genting's Poster Boy
Jessica Tan 05.19.08
His grandfather was the founder, and his uncle is the boss, but Justin Leong is the one to watch as the Malaysian casino operator hunts for big bets
What the heck is Genting anyway? The question was racing through the minds of executives at Stanley Leisure, a U.K. casino chain. This was back in late 2004, just before Genting, the Malaysian conglomerate that runs casino, energy and plantation businesses, picked up a 7% stake in Stanley. "You can be talking to the CEO and the CFO, and they'll ask: 'So who the heck are you guys?'" recalls Justin Leong, the Genting Group's head of strategic investments and corporate affairs. "They'd never even heard of us. Even if people [outside of Asia] have heard of us, they never think of us as potential partners."
Leong, who's the grandson of the founder and all of 30 years old, vows to help change that. At Genting--which boasts the world's largest hotel, the 6,118-room First World that's part of its Genting Highlands casino resort outside Kuala Lumpur--he's responsible for finding new areas for growth. "It's [up to] us to get our name out there and change the mind-sets," he says.
Genting is certainly raising its profile. It's become the largest casino operator in the U.K., where it owns 46 venues after buying out Stanley for $1.3 billion at the end of 2006. In Singapore, it won a hotly contested bid in December 2006 to build the second of two giant casino-resort complexes. Planned to open in 2010, it's expected to draw 15 million tourists a year by 2015. At the 121-acre construction site on Sentosa--the resort island linked to the Singapore mainland by a short causeway--more than 1,000 workers toil away on around-the-clock shifts.
Industry insiders point to Leong as a key agent for change in an often cautious company that's now intent on expansion. He signed on with Genting in 2004, joining his uncle, Chief Executive Lim Kok Thay. Since then he's "played an instrumental role in the company's expansion drive," says OSK Research analyst Keith Wee in Kuala Lumpur. In other words, he's the guy to watch as the company enlarges its footprint and works to become a global brand. "Maybe I've been acting somewhat as a catalyst with new ideas," says Leong, downplaying his role. "But don't forget, over the last four years we have lived in a pretty buoyant economic time. It is a team effort." No doubt that's true, but Leong quickly has become Genting's "most visible face," says CIMB-GK Research analyst Steven Tan. "He's outspoken--not your typical Chinese businessman."
It's a fresh and dashing face, and when he speaks it's with a strong British accent, picked up during his years of schooling in the U.K., from boarding school at Harrow through Oxford University. He still has the Porsche (other-otc: PSEPF.PK - news - people ) his parents gave him when he was accepted to Oxford, but he drives a bmw 5 Series to work. And his business lineage is impeccable. His grandfather, Lim Goh Tong, who died last October at age 90, arrived from Fujian Province at 19 and amassed a fortune that FORBES ASIA valued at $4.3 billion last year. He founded Genting 43 years ago and built it into a group of five listed companies with a combined market capitalization of $24.8 billion at the end of last year. Leong's uncle took over as chairman in 2003 and also ranks among Malaysia's richest, with a net worth of $310 million last year. "Leong has been taught everything by his uncle and grandfather," says Tan. "He is young and energetic, so he's brought a lot more new ideas into the group."
In the quest for more growth, Leong doesn't rule out entering even mature gambling markets such as Las Vegas. "I've been scouting for opportunities, but it's still early days," he says. He recently spent a week in the U.S., looking at everything from empty land where Genting could build from scratch to buying a casino already operating or taking over a listed casino company. "Prices [in the U.S.] have become more attractive, and I think there may be even more attractive opportunities in the next 6 to 18 months."
The "growth hub" for casinos, though, is really Asia, says David Green, director of the gaming practice at PricewaterhouseCoopers' Macau office. He expects Asia's multibillion-dollar casino industry to grow 15% a year. Since Singapore decided to lift its four-decade ban on casinos, other countries in the region such as Thailand and Japan began looking to follow suit. Industry talk has it that Japanese officials have been sizing up Genting's ResortsWorld at Sentosa, and there's speculation that Genting may get the opportunity to replicate its model in Japan. Leong declines to comment on Japan, saying only that "Genting will continue to assess all regional and global gaming opportunities." The company may also look at Macau, despite a recent announcement by what is now the world's largest casino market that it won't award any more casino licenses. "[Macau] is another possible opportunity," he says, adding that Genting could tap into Macau through a tie-up with a license holder or "buying into a license holder." Genting is well armed in its hunt: Its war chest totaled $1.2 billion at the end of 2007.
With opportunities also come challenges. Once Singapore's two megacasinos are ready for business and other countries around Asia open the door to the industry, the group will need to protect its Genting Highlands crown jewel. It says it expects to spend more than $125 million this year to upgrade the resort, focusing on its food outlets, theme parks and high-end hotels. Genting has the only casino license in Malaysia, and it must be renewed each quarter.
After Leong joined Genting, analysts were guarded in their appraisals at first, wondering what a 26-year-old would know about strategic investments, even if he had been an investment banker at Goldman Sachs (nyse: GS - news - people ). But as the U.K. expansion took shape, they warmed up to him. Other casino companies such as Harrah's Entertainment (nyse: HET - news - people ) and MGM Mirage were said to be looking for a slice of the action in the U.K., but Genting swooped in and captured the dominant position. "He was a breath of fresh air," says OSK's Wee. "Immediately after he came on you could see the impact of Genting's investments in the U.K. It was quite aggressive. The group has always been known to be conservative. Venturing into Singapore and investing so much money ($3.9 billion for the casino resort) was not the culture of the group before." Genting beat global names such as luxury resort developer Kerzner International Holdings and Las Vegas hotel and casino outfit Eighth Wonder to clinch the closely watched bid. The Sentosa project will feature a Universal Studios theme park, six hotels and one of the world's largest marine parks.
Leong's close working relationship with his uncle is another plus for investors. "He [Lim] does trust me quite a fair bit and has given me a lot of responsibilities," Leong says. "He has a hands-off management style and delegates authority to his senior executives, giving us the freedom to execute. He sets the vision and direction; I am there to help him execute it." (Lim rarely gives interviews and declined to comment for this story.)
Unfortunately, the execution has been handicapped in the U.K., where a sudden tax increase and a ban on smoking in the past year have hurt Genting International, which includes the group's casinos outside of Malaysia. The Singapore-listed subsidiary reported a net loss of $265 million last year due to a $315 million writedown in goodwill on its U.K. casinos. That was largely the result of the tax increase, the company said in its annual report. The unit had earned a net profit of $38 million in 2006. Genting International is expected to be back in the black this year, with a net profit of $10.6 million. "For the U.K. market, you'll have to take a longer-term outlook," says Wee. "The tax hike has delayed the development of the U.K. gaming industry by a couple more years. But it's still a good investment. The new tax will deter competition, so this may be a blessing in disguise for Genting." Moreover, analysts see its U.K. presence as a stepping stone to opportunities elsewhere in Europe.
Leong doesn't seem worried about the setback in the U.K. "Certainly we're experiencing a weakening U.K. economy and business is tough," he says. "If we have the staying power to ride through the tough times, then we'll benefit from the upturn."
And the U.K. isn't putting much of a damper on Genting's overall business. Over the last four years Genting Berhad (other-otc: GEBEY.PK - news - people ), the group's listed holding company, has almost doubled its revenue and profit. In 2007 it turned in a net profit of $580 million--up 32.2% over 2006--on revenue of $2.5 billion, also a 32.2% jump over the previous year. Revenue should rise another 10.6% over the next two years, Reuters estimates. The stock hasn't been performing as well, however, recently trading at $2.00, just a tad higher than its 52-week low and in line with the Malaysian stock market. Analysts, though, point to strong profit growth from Genting's palm oil plantations and oil-and-gas-production business. Some forecast that the stock price could rise by up to 60% over the next 12 months.
Leong, who's single, shuttles between London; Kuala Lumpur, where Genting is headquartered; Hong Kong, where the group's Star Cruises, the world's third-largest cruise operator, is listed; and Singapore. But the U.K., where his parents have long had a home and where he spent more than ten years in school and working, may be the place he knows best. "His background gives him different perspectives on the U.K.," says Justin Tan, managing director of Genting International. "He's also much younger [Tan is 57], so he understands the younger segment of the market."
It was through one of Leong's leads in London that paved the way for Genting to buy upmarket casino Maxims and break into the London market in the summer of 2004. "It was up for sale and so I met the chief executive," he says. "Outside of Maxims, he said: 'I'll sell it to you at book value.'" That was roughly $18 million, a good deal considering that it was initially for sale for $60 million in 2001. It had been losing money and didn't fit into the owner's main business of high-volume, low-stakes casinos. "So I called my uncle and he said: 'Sure, shake his hand and go buy it.'" Afterward Lim asked him to join Genting and help him expand the business, Leong says. "So he came up with a title: head of strategic investments."
This outcome was never preordained. Like many the offspring of a tycoon, Leong set out after university to prove himself outside of the family business. Growing up, he and his family--his older sister works for Goldman in Hong Kong and his younger sister is a doctor in the U.K.--lived in the sprawling Genting Highlands Resort in the mountains, an hour's drive from Kuala Lumpur. Opened by his grandfather in 1971 and named for the spot where he decided to build it, the resort is still the centerpiece of the Genting empire. "I grew up in Genting," Leong says. His mother, Lim Goh Tong's second daughter, and his father worked at the resort for almost 20 years. "My mom did [personnel] and admin and my dad did the operations for the casinos," he says. "We lived in the fifth-floor penthouse that was directly linked to the office. Growing up, you gradually realize that this wasn't the place that everyone else grew up in."
Coming from a wealthy family can be a "double-edged sword," he adds. "Whilst you are given opportunities, everyone assumes that all that you've achieved is because you're from a big business family." A favorite quotation helps keep him grounded: "Your name might get the door opened for you, but it is really what you do in the room that counts."
So after majoring in geography at Oxford, Leong landed a job at Goldman in London, but not until after 15 interviews. For the next four years he worked on mergers and acquisitions and traded technology stocks. "He was a smart and hardworking guy," says his ex-boss, Richard Campbell-Breedon, a Goldman partner. "I didn't know who he was till he left." That was in 2003, when he decided to return home and reacquaint himself with Malaysia, which was in the last months of the 22-year rule of Prime Minister Mahathir Mohamad, and "to get a better understanding of my identity."
Is Leong--the only Lim grandchild working at Genting--being groomed to take over one day? Some industry watchers certainly think so, but Leong isn't saying. "I'm relatively young. K.T. [Kok Thay, 56] is relatively young. The road ahead is quite long. I just look at it as a day job where I can learn as much as possible."
Don't be fooled. Leong has been clocking in long hours in pursuit of the company's goal to expand. "He's got so many roles to play," says CIMB-GK's Tan. "He hardly sleeps. I've gotten text messages and e-mail replies from him at five in the morning." All for a good cause: to eliminate the need for anyone to ask, What the heck is Genting?
If you want to read more, please visit the following URL: