Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
Genting Malaysia Bhd
(July 11, RM3.78)
Maintain hold at 3.86 with revised target price of RM3.74 (from RM3.67): Resorts World New York (RWNY) looks set to open in 4Q11 with average daily win per video lottery terminal (VLT) of US$400 (RM1,204). We believe Florida's gross gaming revenue (GGR) will rival the Las Vegas strip's if Florida's casino industry is liberalised, a major re-rating catalyst to Genting Malaysia Bhd. Valuations are fair for now but not short on other re-rating catalysts (for example table games at RWNY, revival of Genting Malaysia's JV to develop an integrated resort in Hoi An, Vietnam).
The VLT operator closest to New York City, Empire City Casino, is still recording year-on-year growth in average daily win per VLT of US$340 to US$350. RWNY, with its superior location, should be able to meet our average daily win per VLT assumption of US$400. An additional 475 VLTs are on the cards and lobbying is underway to introduce table games.
Our analyses reveal that Florida's GGR can more than double to US$5.3 billion to US$5.6 billion should the casino industry be liberalised. Assuming Genting Malaysia commands US$1 billion in GGR, we estimate that it will accrete +66% to earnings before interest, tax, depreciation and amortisation (Ebitda). Its decision to acquire the Miami Herald Media Co property to develop Resorts World Miami (RWM) is a masterstroke as it is located between the Port of Miami and Miami International Airport.
Resorts World Genting (RWG) operations are stabilising after marked VIP volume attrition y-o-y in 1Q11. The recently secured Solihull large casino licence to be developed into Resorts World at the National Exhibition Centre (RWNEC) at Birmingham, United Kingdom, is not expected to contribute materially to earnings. Genting Malaysia's 50:50 joint venture to develop an integrated resort in Hoi An, Vietnam is, we understand, being renegotiated and not aborted.
Our earnings estimates are relatively unchanged as we have not imputed the additional 475 VLTs at RWNY until approval has been secured and RWNEC will not commence contributions until 2014, beyond our investment horizon. Our discounted cash flow-based target price is tweaked to RM3.74. Maintain 'hold' but we will turn very positive should table games be introduced at RWNY and the Florida and Vietnamese casino industries be liberalised. ' Maybank IB Research, July 11
This article appeared in The Edge Financial Daily, July 12, 2011.
Company Name: GENTING MALAYSIA BERHAD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 3.74 |
Genting Malaysia Bhd
(July 11, RM3.78)
Maintain hold at 3.86 with revised target price of RM3.74 (from RM3.67): Resorts World New York (RWNY) looks set to open in 4Q11 with average daily win per video lottery terminal (VLT) of US$400 (RM1,204). We believe Florida's gross gaming revenue (GGR) will rival the Las Vegas strip's if Florida's casino industry is liberalised, a major re-rating catalyst to Genting Malaysia Bhd. Valuations are fair for now but not short on other re-rating catalysts (for example table games at RWNY, revival of Genting Malaysia's JV to develop an integrated resort in Hoi An, Vietnam).
The VLT operator closest to New York City, Empire City Casino, is still recording year-on-year growth in average daily win per VLT of US$340 to US$350. RWNY, with its superior location, should be able to meet our average daily win per VLT assumption of US$400. An additional 475 VLTs are on the cards and lobbying is underway to introduce table games.
Our analyses reveal that Florida's GGR can more than double to US$5.3 billion to US$5.6 billion should the casino industry be liberalised. Assuming Genting Malaysia commands US$1 billion in GGR, we estimate that it will accrete +66% to earnings before interest, tax, depreciation and amortisation (Ebitda). Its decision to acquire the Miami Herald Media Co property to develop Resorts World Miami (RWM) is a masterstroke as it is located between the Port of Miami and Miami International Airport.
Resorts World Genting (RWG) operations are stabilising after marked VIP volume attrition y-o-y in 1Q11. The recently secured Solihull large casino licence to be developed into Resorts World at the National Exhibition Centre (RWNEC) at Birmingham, United Kingdom, is not expected to contribute materially to earnings. Genting Malaysia's 50:50 joint venture to develop an integrated resort in Hoi An, Vietnam is, we understand, being renegotiated and not aborted.
Our earnings estimates are relatively unchanged as we have not imputed the additional 475 VLTs at RWNY until approval has been secured and RWNEC will not commence contributions until 2014, beyond our investment horizon. Our discounted cash flow-based target price is tweaked to RM3.74. Maintain 'hold' but we will turn very positive should table games be introduced at RWNY and the Florida and Vietnamese casino industries be liberalised. ' Maybank IB Research, July 11
This article appeared in The Edge Financial Daily, July 12, 2011.
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