Thursday 28 Mar 2024
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KUALA LUMPUR: Shares in Genting Malaysia Bhd fell as much as 4.42% yesterday, after the gaming group failed to secure one of the three casino licences in upstate New York, the United States.

The stock fell as much as 18 sen to reach an intraday low of RM3.89 before paring losses. Its share price rebounded to end the day down 2.95% to RM3.95, with 9.89 million shares traded.

It was one of the top losers on Bursa Malaysia. For comparison, the FBM KLCI rose 1.07% to close at 1,699.95 points yesterday.

In a filing with Bursa Malaysia yesterday, Genting Malaysia said on Wednesday the New York Gaming Facility Location Board announced that it had selected three destination gaming resorts to be considered for commercial casino licences by the New York State Gaming Commission.

“We wish to announce that RW Orange County LLC has not been successful in its applications,” it added.

Genting Malaysia’s indirect wholly-owned subsidiary, RW Orange County, had on June 30, 2014 submitted applications to participate in the selection process for the project.

According to a Reuters report, the New York State Gaming Commission had approved three casino developments worth US$1.4 billion (RM4.9 billion).

Montreign Resort and Casino was selected to build a US$630 million development in Thompson in the Catskills. Rivers Casino and Resort won in Schenectady with a proposal for a US$300.1 million resort and 50,000 sq ft casino.

Lago Resort Casino won with a US$425 million proposal to build a 94,000 sq ft casino in Tyre.

The remaining 13 proposals were rejected, including Genting Malaysia’s US$1.5 billion Sterling Forest Resort. Analysts cut their target prices (TP) for Genting Malaysia following the news yesterday.

CIMB Investment Bank Bhd lowered its TP for Genting Malaysia to RM5.51 from RM5.90, but kept its “add” rating on the stock.

“While we are disappointed by the decision, Genting Malaysia remains an “add” as valuations remain compelling. Our revised net asset value (RNAV)-based TP is lowered as we remove our 39 sen RNAV estimate from New York,” CIMB said in a note to clients.

“The state board chose three developers that excluded any bids in Orange and Ulster counties,” it said.

CIMB said both of Genting Malaysia’s bids were located in Orange county.

Meanwhile, Maybank Investment Bank Bhd cut its TP for Genting Malaysia to RM4.60 from RM5.05 previously. It, however, retained its “buy” call on the stock.

“We leave our earnings estimates unchanged, but cut our target price to RM4.60 from RM5.05, attributed to our belief that Genting Malaysia will win at least one licence,” said Maybank IB.

According to theedgemarkets.com, Genting Malaysia’s valuation score stood at 0.60, on a scale of 0-3, with 3 suggesting a company gives higher than market average returns and is trading at a lower than average valuation.

Its fundamental score stood at 2.40 on a scale of 0-3, with 3 suggesting that it is profitable and has strong balance sheet. Genting Malaysia’s stock also has a low volatility rate of 1, which measures the volatility of a stock based on its share price movements relative to the whole market over a period on a scale of 1 to 5, with 1 being the least volatile.

 

This article first appeared in The Edge Financial Daily, on December 19, 2014.

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