Genting will likely carry on with Las Vegas project despite higher costs

PETALING JAYA: Genting Bhd will most likely continue with its US$4bil Las Vegas project despite the weaker ringgit and potentially higher costs of borrowings.

“Once operations start, Genting will receive its revenue in US dollars, hence reducing its risks. Moreover, Genting has very strong financial muscle and it wouldn’t be a trouble for it to fund the project,” an analyst told StarBiz yesterday.

CIMB Research said Genting was still finalising its development plans for the project and talking to bankers about financing options before finalising the budget and development proposal to submit to the board in early financial year ending Dec 31, 2015 (FY15).

“Capital expenditure for the project will mostly be incurred in FY16, for a targeted opening in FY17. The casino licence will be awarded about nine months before the casino’s opening.”

As at end-September, the group had cash and cash equivalents of RM15bil against short-term borrowings of RM2bil.

In a separate report, UOB KayHian Research said the management was refining the details of Resorts World Las Vegas’ development before a final submission to the regulator for construction approval.

As for the development in New York, UOB KayHian Research noted: “We are positive on Genting Malaysia’s chances of securing one of the upstate New York gaming licences due to the high licensing fee and employment salaries proposed.

“The state’s gaming regulator will meet in the coming weeks and announce the winning bidders.”

As for Genting’s plan to venture into Japan, UOB KayHian Research said Japan’s gaming liberalisation suffered a hiccup as Prime Minister Shinzo Abe had called for a snap election, some two years ahead of schedule.

“Should we remove the Japan ‘option value’ imputed in Genting Singapore’s sum-of-the-parts (SOTP), it will only reduce our Genting’s SOTP-based target price by 30 sen,” the research unit noted.

UOB KayHian Research said it continued to like Genting for its relatively cheap valuation, exposure to the group’s expansion opportunities and insulation from the Chinese high rollers’ slowdown.

A number of research houses have reduced the target price for Genting as financial results for its third quarter ended Sept 30 came in below expectation, especially with the weaker performance of its gaming arm.