GENM (4715) : Genting Malaysia - Loses out in New York
Target RM5.51 (Stock Rating: ADD)
GENM failed to win a casino licence in upstate New York (NY). The state board chose three developers that excluded any bids in Orange and Ulster counties. Both of GENM’s bids were located in Orange county. While we are disappointed by the decision, GENM remains an Add as valuations remain compelling. Our RNAV-based target price is lowered as we remove our 39 sen RNAV estimate from NY. The share price is unlikely to react negatively as consensus had not imputed any contribution from NY. Potential re-rating catalysts are the opening of the theme park ahead of expectation and additional table capacity in Genting Highlands.
What Happened
The NY state board announced the winners of the NY upstate casino bids. They are 1) Montreign Resort Casino (owned by Empire Resorts); 2) Rivers Casino (owned by Capital Region Gaming LLC); and 3) Lago Resort and Casino (owned by Wimorite Inc). None of the six bids in Orange county were awarded as the board reasoned that it would hurt gambling sites already built close to NY City. The recommended winners will still need approval by the Gaming Commission and must complete a background check by the State Police and all environmental reviews
What We Think
We are disappointed that GENM did not win any of the licences. Empire Resorts (listed on NASDAQ) is 50% owned by the Lim family, through Kien Huat Realty and operates the Monticello Casino & Raceway in New York. However, we do not think that GENM’s share price will react negatively as consensus had not imputed any RNAV contribution from upstate NY.
What You Should Do
Remain invested in GENM. Investors can still look forward to the opening of 1) the new 20th Century Fox theme park. Our channel checks suggest that it is likely to open in early 2016; 2) Sky Avenue and Plaza in 2016; 3) Genting Premium Outlets in Awana in late 2015; and 4) new gaming capacity in tandem with the expansion in hotel rooms. At the current share price, investors are receiving Genting UK, Genting NY, Genting HK and GENM’s net cash for free. GENM remains our top pick in the gaming sector.
Source: CIMB Daybreak - 18 December 2014, Full PDF Report
Target RM5.51 (Stock Rating: ADD)
GENM failed to win a casino licence in upstate New York (NY). The state board chose three developers that excluded any bids in Orange and Ulster counties. Both of GENM’s bids were located in Orange county. While we are disappointed by the decision, GENM remains an Add as valuations remain compelling. Our RNAV-based target price is lowered as we remove our 39 sen RNAV estimate from NY. The share price is unlikely to react negatively as consensus had not imputed any contribution from NY. Potential re-rating catalysts are the opening of the theme park ahead of expectation and additional table capacity in Genting Highlands.
What Happened
The NY state board announced the winners of the NY upstate casino bids. They are 1) Montreign Resort Casino (owned by Empire Resorts); 2) Rivers Casino (owned by Capital Region Gaming LLC); and 3) Lago Resort and Casino (owned by Wimorite Inc). None of the six bids in Orange county were awarded as the board reasoned that it would hurt gambling sites already built close to NY City. The recommended winners will still need approval by the Gaming Commission and must complete a background check by the State Police and all environmental reviews
What We Think
We are disappointed that GENM did not win any of the licences. Empire Resorts (listed on NASDAQ) is 50% owned by the Lim family, through Kien Huat Realty and operates the Monticello Casino & Raceway in New York. However, we do not think that GENM’s share price will react negatively as consensus had not imputed any RNAV contribution from upstate NY.
What You Should Do
Remain invested in GENM. Investors can still look forward to the opening of 1) the new 20th Century Fox theme park. Our channel checks suggest that it is likely to open in early 2016; 2) Sky Avenue and Plaza in 2016; 3) Genting Premium Outlets in Awana in late 2015; and 4) new gaming capacity in tandem with the expansion in hotel rooms. At the current share price, investors are receiving Genting UK, Genting NY, Genting HK and GENM’s net cash for free. GENM remains our top pick in the gaming sector.
Source: CIMB Daybreak - 18 December 2014, Full PDF Report
