KUALA LUMPUR (Feb 23): Genting Bhd's 52%-owned subsidiary Genting Singapore PLC's (GENS) planned integrated resort in Japan may cost up to US$12 billion (about RM53 billion), according to TA Securities Holdings Bhd's report, which quoted GENS's management.

TA analyst Tan Kam Meng wrote in the report today that land alone would cost between US$2 billion and US$3 billion, based on GENS's recent survey. Tan said GENS "agreed" that the project would cost between US$7 billion and US$12 billion.

"Sitting on a cash pile of S$5 billion and borrowings of S$3.5 billion, where the bulk of the borrowings are perpetual securities (67%), GENS is in a good financial position in contending for a casino licence in Japan. According to management, a project IRR (internal rate of return) between 10% and 15% is required, considering all factors including political risks.

"Management also hinted that the project is still viable even without a controlling stake in the JV but it will be infeasible with a stake as small as 10%," Tan said.

TA's note followed an announcement on GENS's financials for the year ended Dec 31, 2016 (FY16). Yesterday, GENS told the Singapore bourse that FY16 net profit rose to S$266.35 million (about RM838 million) from S$75.19 million.

Today, Tan said GENS's FY16 core earnings of S$281.9 million had beaten consensus forecast. "We keep our Genting Bhd's FY17-18 earnings unchanged as GENS's FY16 profit after tax accounted for 97% of our forecast," he said.