Little surprise in Genting's 2nd bid for New York casino licence

  • Business
  • Thursday, 03 Jul 2014

PETALING JAYA: Genting Malaysia Bhd’s second bid for a casino licence in upstate New York came with little surprise, with analysts saying the gaming group’s expansion in Resorts World Genting was more exciting.

The group released a document on Tuesday noting that its indirect wholly-owned subsidiary, RW Orange County LLC, has added a second bid for a casino licence in the Orange County area of the Catskills and Hudson Valley in New York.

UOB KayHian Research noted in its report that Genting was facing keen competition for the site, which had attracted eight bids.

The research house added that it needed more information before it could decide on a revised outlook.

“The news did not come as a surprise as Genting had earlier paid a US$1mil application fee to the regulator to participate in the bidding process. As of now, we have not imputed any ‘option value’ to the project pending key details like tax rates and gaming capacity from management.”

Public Invest Research gaming analyst Siew Jin Ling said while another casino in New York would complement the group’s existing racino operation, the research house was neutral on the prospects in view of the stiff competition and less attractive gaming market in the US.

Earlier, RW Orange County had submitted a proposal for the Sterling Forest Resort in Tuxedo to develop a 238-acre resort on the current site of the Tuxedo Ridge Ski Center.

Sterling Forest Resort would include a casino, two hotels, restaurants and facilities for year-round outdoor recreation including skiing. The development is expected to incur a capex of US$350mil, which is the minimum required by the New York Gaming Commission.

“Revenue from New York’s existing Native American casinos declined in 2012, one of six states nationally to record a decline in gaming revenues.

“We believe however the group will see a boost in 2016 mainly from its expansion in Resorts World Genting,” Siew said in a report.

UOB Kay Hian agreed that the Genting Highlands’ expansion was more exciting. “Despite muted near-term earnings, we advocate investors to revisit the stock towards end-2014 as we move closer to the highly-anticipated theme park reopening and 50th anniversary celebration of Genting Highlands, both expected in end-2015.”

RW Orange County LLC, had submitted its US$1mil (RM3.21mil) application fee to the gaming commission on April 23 to mark its interest to set up a casino in the Big Apple. If the application goes through, it would be the Genting group’s third casino in the US, UOB Kay Hian noted.

Kenanga Research’s top gaming stock pick is still Genting, given the exciting new casino market story such as Korea and Japan, as well as the new RW Las Vegas casino.

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