Saturday, June 28, 2014

NEXT For Genting Bhd ... Still In Expansionary Mode !

It is aggressively expanding its gaming footprint in key markets while eyeing lucrative casino licenses in NY and Japan.

Its expansionary mode for 2014 may continue to weigh down its share price.

Genting remains busy in seeking out new casino resort projects and even uses resources to build its USD4 billion Resorts LV and a USD2.2 billion casino resort in Jeju Island.

Year 2014 as an expansionary year for Genting as it needs funds and time to turn its active plans into business contributions. This in the near term, its share price may continue to lag behind those of regional peers.

Another key reason for the underperformance prior to June 2014 could be the group being subjected to overseas contributions. Its share price could also be dragged down by Genting Singapore as it hold close to 52% of its Singapore unit.

In the case of Genting Malaysia, also not expecting to perform well given the refurbishment of its theme park in Genting Highlands is ongoing.

As at March 2014, Genting Mal has rm3.7 billion in cash.

The construction of the Vegas casino is expected to start in 2HFY2014 and it will take two to three years from 2014 to complete.

Genting also faces an uphill battle for four coveted casino resort licenses being issued by NY state. If Genting is unable to get a license in NY, there could be some weakness in sentiment among investors.

Genting has always plans to have some of its assets listed in Malaysia such as the power business. The energy business will also be unlikely to give a revenue contribution now (June 2014). They are continuing with their exploration phase.

The most obvious listing choice is left over is O&G and small investments in Power assets.

Overall the industry observes are positive about Genting given the encouraging volume in Genting Singapore and its potential ventures in Japan and Korea.

Genting Malaysia, will not see any near term catalyst and any boost to Genting Malaysia will come only in 2016 onwards after the opening of its Twentieth Century Fox Outdoor Theme Park in Genting Highlands, an additional hotel as well as improvements

Also does not expect any news from US and UK to significantly boost the group’s share prices unless revenue from its expansion plans kicks in or the company hears from new developments from Japan and Korea.

The gaming sectors in the US, UK and Macau are mature and the group may face competition to bring the business to the next level. In contrast, Japan and Korea are considered new markets with better growth potential.

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Please note that all data given are merely blogger's opinion. It is strongly recommended that you do your own analysis and research before investing.