Genting Malaysia - Maiden contribution from RWNY BUY

Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD

Research House: AMMB

Price Call: BUY

Target Price: 4.30

Maintain BUY on Genting Malaysia Bhd (GenM), with an unchangedRNAV-based fair value of RM4.30/share. GenM's results were within consensusestimates and our expectations. 

We have tweaked GenM's FY12F to FY13F earnings forecasts forhousekeeping reasons and to account for lower daily wins per machine at'Resorts World New York'(RWNY). 

Our new assumption is a daily win of US$330/machine for FY12Fversus US$400/machine previously. Year-to-date, average daily win wasUS$347/machine.

GenM recorded a maiden contribution from RWNY in FY11. Excludingcost overruns, which contributed to a loss of RM17.3mil in 4QFY11,operationally RWNY recorded revenue of RM95.3mil and EBITDA of RM23.6mil fromtwo months of operations in FY11. This implies an EBITDA margin of 24.8%.

We understand that RWNY has stepped up its marketing effortsin New York and has implemented a bus programme running to, and from, Queensand Manhattan.

We also gather that there are seasonality trends to the averagedaily wins/machine. The average daily wins/machine tends to decline duringwinter and pick up during summer. 

As for the legalisation of a full-fledged casino licence in NewYork, we understand that the legislative process would take 2'' to three years.In Miami, the next seating for the approval of the casino bill would be inFY13F.

Revenue of GenM's casino operations in Malaysia rose 7% YoYto RM5.4bil in FY11, underpinned by improvements in win percentage. If luckfactor were to normalise, then revenue would have risen by only 4% YoY in FY11. 

Non-VIP players drove the increase in the volume of business.Volume of business from the non-VIP segment rose by a low double-digitpercentage YoY in FY11. This helped compensate for a single-digit percentagedecline in the volume of business from the VIP players.

In the UK, volume of business at the London casinos climbed22% YoY in FY11. Volume of business at the provincial casinos was flat YoY inFY11.   

Source: AmeSecurities