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Genting Malaysia Bhd
(July 2, RM4.15)
Maintain neutral with target price of RM4.35: Genting Malaysia announced that it had submitted its application to participate in the selection process to develop and operate a casino in New York state on June 30, 2014. According to media reports, the group submitted two bids — one for a casino in Hudson Valley and the other in Tuxedo to boost its chances of being selected. We are neutral on the development, as these casinos would be located in upstate New York which is less populated compared to downstate where Manhattan is located.
Furthermore, competition will be stiff — a total of four new casinos will be built, in addition to five existing full-scale native American casinos and nine racinos in the state.
To recap, the New York Gaming Commission called for bidding proposals for up to four casino licences for gaming facilities to be built in upstate New York. At the closing date, 16 companies had submitted a total of 17 bids.
Genting Malaysia has proposed a 238-acre (96.3ha) resort on the current site of the Tuxedo Ridge Ski Centre, dubbed the Sterling Forest Resort. The development is expected to incur capital expenditure (capex) of US$350 million (RM1.12 billion), which is the minimum required by the New York Gaming Commission.
The group has also proposed a US$500 million project, dubbed Resorts World Hudson Valley, in Montgomery.
Maintain “neutral” with unchanged target price of RM4.35. While another casino in New York will complement the group’s existing racino operation, we are neutral on the prospects in view of the stiff competition and less attractive gaming market in the US. — PublicInvest Research, July 2, 2014
This article first appeared in The Edge Financial Daily, on July 3, 2014.
