Gains from Genting Malaysia’s Miami land disposal a large windfall, says Nomura

• In a note, Nomura analysts Tushar Mohata and Alpa Aggarwal said the sale was a very positive development for the company and its parent, Genting Bhd.
• “The original cost of investment in 2011 was US$259 million, and the carrying value as of now is US$255 million, implying Genting Malaysia would gain US$966 million if the planned purchase materialises,” they wrote.

KUALA LUMPUR (April 27): Gains from Genting Malaysia Bhd’s (GenM) planned disposal of four parcels of land in Miami measuring 15.47 acres (Miami Herald Land) for US$1.225 billion (RM5.433 billion) represent a large windfall for the company, according to Nomura.

In a note, Nomura analysts Tushar Mohata and Alpa Aggarwal said the sale was a very positive development for the company and its parent, Genting Bhd.

“The original cost of investment in 2011 was US$259 million, and the carrying value as of now is US$255 million, implying Genting Malaysia would gain US$966 million if the planned purchase materialises,” they wrote.

“This is a large windfall for the company, in our view, and will help improve the balance sheet for both Genting Malaysia and Genting after years of capex, Covid-19 related slowdown and generous dividends, which have resulted in its net debt-to-equity rising from 19% as of end-2019 to 71% as of end-2022.

“A rough calculation shows that Genting Malaysia’s net debt to equity will fall back sharply to 21% post the sale.

“We believe the cash proceeds are likely to be retained within the company for the time being to help fund the down-state New York gaming license capex, should Genting Malaysia be successful in the bidding process. We expect the license award timeline in 1Q2024,” they were quoted as saying by industry magazine Inside Asian Gaming on Thursday (April 27).

In a bourse filing on Thursday, GenM said its unit Resorts World Miami, LLC had entered into a conditional sale and purchase agreement (“SPA”) with Smart Miami City, LLC.

“Based on the Disposal Consideration of US$1.225 billion (equivalent to approximately RM 5.433 billion), GenM expects to realise an estimated gain on disposal of US$967 million (equivalent to approximately RM4.289 billion),” it said.