Genting’s still the cash king

CASH is king, especially when times are bad.

Crisis presents opportunity, and those with cash can swoop in and buy whatever they want at a palatable valuation.

In terms of cash-rich companies, Genting Bhd remains as the largest net cash company with RM9bil as of Nov 30, almost unchanged compared with the previous quarter ended September 2017.

It would be interesting to see if the cash position remains in the following year, considering the challenging year it has had.

During Pakatan Harapan’s maiden budget, punitive measures were handed out on Genting when casino duties were revised up to 35%, which is a 10% increase, effective Jan 1.

A month after Budget 2019 was tabled, Walt Disney and the 21st Century Fox decided to abandon the contract to build the first Foxbranded theme park in Genting Highlands on the grounds of default.

Just last week, Wynn Resorts Holdings LLC has filed a lawsuit against Genting’s Resorts World Las Vegas casino project for being too similar in terms of the architectural design.

Who says airlines are meant to be bogged down by debt?

Another surprise was the AirAsia Group which turned from a net debt of RM7.6bil to net cash of RM2.25bil mainly due to the completion of its sale of 182 airplane leasing operations to BBAM Ltd Partnership in March.

Its cash position is likely to improve considering that it is disposing of 25 more aircraft to US private investment firm Castlelake LP in a deal worth US$768mil (RM3.22bil).

As for Petroliam Nasional Bhd (Petronas), it has seen its net cash position increase by a stunning RM1.8bil or 99% to RM3.5bil despite the poor oil price situation.

This could be due to cost optimisation and prudent measures it has undertaken.

Petronas’ total spending during the first nine months of this year was RM26.5bil, compared with the RM33.8bil in capital investment it made in the first nine months of 2017.

The national oil company has also pegged the oil price outlook at US$60 to US$70 per barrel in its 2019-2021 report as compared with US$50 to US$80 in its previous 2018-2020 outlook.

It is unwise to write off the Lion Group, considering both its retail and steel arms are in net cash position.

Parkson Holdings Bhd has a net cash position of RM338.53mil, while Lion Industries Bhd isn’t very far behind at RM231.18mil.

Meanwhile, despite the problems in the media and print industry, The Star Media Group stands out with its net cash position of RM321.86mil.

The bulk of the cash comes the disposal of its entire stake in Singapore’s Cityneon Holdings Ltd last year. The company is actively searching for new investment opportunities especially in the digital sector to complement and enhance its existing assets.

Another surprise is the net cash position of oil and gas exploration company Hibiscus Petroleum Bhd. In an industry which is known for its heavy capital expenditure requirement, Hibiscus stands out with its net cash position of RM302.19mil

The company is sitting on a

sweet spot as its average production cost per barrel of oil is below US$20.

Another cash rich company is regional oil refining company Hengyuan Refining Co Ltd, formerly known as Shell Refining Co Bhd, which has a net cash position of RM505.15mil.

Hengyuan is an oil refiner which earns its money from the spread between the price of oil and petroleum products.

As a refiner, Hengyuan makes more money when oil prices move faster than petroleum products. However, it also tends to lose money when prices go south, as it is unable to immediately pass on the higher cost to customers.

Here are the Top 50 companies with the highest net cash position on Bursa Malaysia ( see chart above).