Genting Bhd
(Dec 18, RM8.76)
Maintain “add” with a lower target price of RM5.51: The New York (NY) state board announced the winners of the NY upstate casino bids. They are Montreign Resort Casino (owned by Empire Resorts); Rivers Casino (owned by Capital Region Gaming LLC); and Lago Resort and Casino (owned by Wimorite Inc).

None of the six bids in Orange County were awarded as the board reasoned that it would hurt gambling sites already built close to NY City. The recommended winners will still need approval by the Gaming Commission and must complete a background check by the State Police and all environmental reviews.

We are disappointed that Genting Malaysia did not win any of the licences. Empire Resorts (listed on Nasdaq) is 50% owned by the Lim family, through Kien Huat Realty and operates the Monticello Casino & Raceway in New York.

However, we do not think that Genting Malaysia’s share price will react negatively as consensus had not imputed any revised net asset value contribution from upstate NY.

Remain invested in Genting Malaysia. Investors can still look forward to the opening of the 20th Century Fox theme park. Our channel checks suggest that it is likely to open in early 2016; Sky Avenue and Plaza in 2016;  Genting Premium Outlets in Awana in late 2015; and new gaming capacity in tandem with the expansion in hotel rooms.

At the current share price, investors are receiving Genting UK, Genting NY, Genting HK and Genting Malaysia’s net cash for free.

Genting Malaysia remains our top pick in the gaming sector. —  CIMB Research, Dec 18

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