Friday, July 19, 2013

Genting outdoor theme park closing? No worries: HLIB Research

From Star Online: Business

By HLIB Research

19th July 2013

KUALA LUMPUR: News that Genting Highland may close its outdoor theme park for two years for a major refurbishment from Sept 1 this year should not have any adverse effect onGenting Malaysia’s performance, Hong Leong Investment Bank Research said.

The news is not unexpected as it comes on the back of the closure of two rides in the park on July 1, it said. And, moreover, it meshes with Genting Malaysia’s announcement early in June that it was planning a RM3bil facelift for the casino resort.

An official announcement on the subject is expected on Friday, July 26.

 

“As to the impact of the closure of the theme park, we do not expect any major financial losses as entertainment revenues contribute only marginally to the group. The bulk of RWG’s revenue is derived from its gaming activities while only around 5% are from entertainment,” HLIB Research noted.

It said the potential loss from entertainment revenue would likely be offset by the higher-than-expected net wins obtained from the casino in Resorts World New York, where weekly average net wins stand at US$432/Video Lottery Terminal/day – a 14.6% premium to its forecast net wins of US$377.

Risks to performance, if any, it said, would come from cannibalisation from Macau and Singapore, appreciation of the ringgit and a rejection of the proposal to operate a full-fledged casino at Resorts World New York.

HLIB Research’s forecasts for Genting Malaysia remain unchanged as it maintains its Hold call with fair valuation at RM4.10 for the stock, currently trading at around RM3.87, with industry rating pegged at Overweight.

[Source]

 

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