Genting Malaysia (GENM) joint venture with RAV Bahamas to open RM 74 mil luxury boutique casino Resort World Bimini Bay in the Bahamas

After the setback in Genting Malaysia Bhd's venture in Miami, the company has bounced back with a new casino development in the Bahamas worth US$24mil (RM74mil).

It was reported that the company had entered into a joint venture (JV) agreement last Friday with RAV Bahamas to open Resort World Bimini Bay, a luxury boutique casino on Bimini Island.

The 10,000 sq ft casino is set to be open in December at the Bimini Bay Resort and Marina, in north Bimini Island.

The casino will feature full-scaled table games, slots and sports betting in a venue similar to Genting's casinos in London.

Genting Malaysia plans to refurbish a structure, which was built more than five years ago. The casino will be the only one on Bimini Island which is 48 nautical miles off the South Florida coast, the United States.

Genting Malaysia's JV partner RAV Bahamas developed Bimini Bay and the Rockewell Island Beach Estates.

The casino will create at least 300 jobs for the island, and also help to boost tourism.

In May, the island's unemployment rate stood at 15% while youth unemployment was at 34%.

In January, Genting Malaysia's venture in Miami had taken a blow when the state legislature pulled a vote to liberalise gambling activities in Florida.

However, Genting Malaysia announced that it would be moving forward with plans for a luxurious mixed-use development on the bayfront.

The company, through its unit Resorts World Miami, has intended to build a US$3.8bil casino and 5,200-room hotel complex.

It had spent US$500mil purchasing real estate in Miami for the future casino. The vote has been postponed to next year due to lack of support.

Genting Malaysia had also planned to build a US$4bil convention centre at Aqueduct Racetrack in Queens, New York that would have been an extension of its existing project Resort World New York.

However, state governor Andrew Cuomo had said negotiations with the group had broken down.

Analysts believed the impact of Resort World Bimini Bay would be insignificant to the company as the outlay of US$24mil was small compared with Genting Malaysia's net cash of RM1.04bil as at first quarter ended March 31.

UOB Kay Hian Research analysts said in a report they are lukewarm to the new deal although it would be Genting Malaysia's first full-fledged casino in the United States as the Bahamian government had already approved it.

“However, we opine the value accretion to Genting Malaysia would be marginal given the small size of the casino to be built and also profits would be shared with its JV partner, RAV Bahamas,” the report said.

RHB Research analyst Hoe Lee Leng said the deal came as a surprise, as it was not mentioned by Genting Malaysia's management as part of its expansion plans.

However, it is believed that this development is part of the company's bigger plan to encourage the Miami government to vote in favour of legalising casinos.

HLIB Research said: “This news gave Genting Malaysia a little hope after disappointments from its casino expansion plans in New York and a destination resort in Miami.”

“This also further confirms our view that Genting Malaysia will be continuously seeking for other opportunities internationally,” it added.

Analysts pointed out that there might be a risk of acceptance with Bimini Island being known more for fishing activities rather than for its nightlife attractions.

According to The Miami Herald, Bahamian officials estimate the project impact at least 1,000 people indirectly.

The Bahamian government will help to provide training for the population of less than 3,000 people.

Bahamas Tourism Minister Obie Wilchcombe said he was discussion with Bahamas Air and two other major national airlines to add services to Bimini.

Source: www.thestar.com.my

Genting Malaysia's plan for the nation’s largest convention center and potential casino at New York City’s Aqueduct race track has been scrapped - New York Governor Andrew Cuomo

New York Gov. Andrew Cuomo said Friday that his grand plan for the nation’s largest convention center and potential casino at New York City’s Aqueduct race track has been scrapped.

He said the proposal unveiled as a centerpiece of his State of the State speech in January isn’t going forward, but said he’s begun talking to additional developers compete next year for a project that could include a casino. On Friday night, developers surfaced for a new effort to build a convention center and casino.

“The conversations hadn’t really worked out,” Cuomo said of talks with the Genting Organization. He announced the setback to one of his biggest jobs and economic development projects Friday afternoon on former Gov. David Paterson’s WOR radio show.

He said he’s now talking to other developers after talks broke down with the Genting Organization, which was to provide the funding. He said premier national and global companies have shown interest.

Genting, operating as Resorts World, said it remains in the competition and supports Cuomo’s approach.

“We have several great ideas to develop our site into one of the world’s premier destinations for gaming and conventions, and we now look forward to working with Gov. Cuomo and participating in any competition for a convention center/casino project that the governor designs,” the company stated.

Another major player, MGM Resorts, also said it was in the hunt.

“We believe our integrated resorts model, including convention facilities, will result in thousands of jobs for New Yorkers and tremendous economic opportunities for local businesses,” stated MGM Resorts International’s senior vice president for public affairs, Alan M. Feldman.

Cuomo had said the $4 billion convention center would create thousands of jobs, help boost the economy and allow a new use for the Javits Center in Manhattan.

The proposed convention center would be located between New York City’s airports, and trains could easily take convention attendees and gamblers from Manhattan and Long Island.

As he announced the convention center plan in his State of the State speech, Cuomo said it would make New York “the No. 1 convention site in the nation.”

Public opinion polls, however, didn’t share Cuomo’s enthusiasm for a 3.8-million square foot facility in Queens that could turn into a casino complex. Cuomo’s plan included altering the Javits Convention Center on Manhattan’s West Side for smaller shows and conventions to better suit its smaller size and congested location.

Now, Cuomo says he has developers interested in a “mega-development” that would include a casino after he predicts voters will approve a referendum to allow casinos to be built and run by private companies away from Indian land. The state constitution doesn’t allow casinos, and Indian casinos are operated under federal law.

“That’s my thinking now, but it’s evolving,” Cuomo said.

In January, Cuomo announced that Genting had signed a non-binding letter to build what was to be called the New York International Convention and Exhibition Center and create more than 10,000 jobs.

At the time, state Comptroller Thomas DiNapoli was cautious of the announcement. He said he prefers a competitive process to assure the best deal for taxpayers.

Malaysia-based Genting spent more than $774,000 on New York lobbying in the first 10 months of 2011, or 10 times its total for 2010.- AP

Source: www.longislandpress.com

On 2 June, Genting Malaysia stock price dropped 4.1% to close at RM 3.54

Genting Malaysia Bhd. (GENM) dropped the most in almost four months in Kuala Lumpur trading after talks to build a $4 billion convention center next to its New York City casino fell through.

The stock declined 4.1 percent to close at 3.54 ringgit, its largest fall since Feb. 8. It was today’s second-worst performer on the benchmark FTSE Bursa Malaysia KLCI Index, which fell 1.2 percent. Its parent Genting Bhd. (GENT) dropped 3 percent to 9.70 ringgit, the lowest close since Oct. 11

Genting Malaysia wanted to build a 3.8 million-square-foot convention center at Aqueduct Racetrack in Queens where it opened Resorts World Casino New York City last year. Negotiations fell through after weeks of discussion, New York Governor Andrew Cuomo said in an interview on the WOR-AM radio station on June 1. This follows a delay in the group’s plan to build a $3 billion hotel and casino in Miami after a Florida House of Representatives committee postponed a vote on a bill to expand casino gambling.

“This news gave Genting Malaysia a double whammy, experiencing failure in two of the group’s expansion plans in the U.S.,” Low Yee Huap, an analyst at Hong Leong Financial Group Bhd. (HLFG), wrote in a report today. He kept his hold rating with a price estimate of 4.10 ringgit.

Conversations with Genting “haven’t worked out,” said Cuomo, who added that he’s now discussing building a similar project with other companies. Genting may still bid on a convention center project in the city, said Stefan Friedman, a Genting spokesman.

Genting operates the only gaming resort on a hilltop in Muslim-majority Malaysia. Unable to open more casinos on home turf, it’s been expanding abroad. The group is already the U.K.’s biggest casino-operator and opened one of two gambling resorts in Singapore (GENS) in 2010.

Source: www.bloomberg.com

Genting Malaysia downgraded by RHB Research on slower progress of legalisation and hitches encountered in Genting Malaysia’s expansion plans into new geographical areas, target price RM 4.20

(GENM opening stock price yesterday (30.4.2012) was RM 3.79)

We have upgraded our forecasts by 3.6%, 1.4% and 1.2% for the financial years ending Dec 31, 2012 (FY12), FY13 and FY14 respectively, after making some adjustments for our capital expenditure (capex) assumptions based on management guidance as well as raising our earnings before interest, tax, depreciation and amortisation (EBITDA) margins assumptions for Resort World New York (RWNY) to between 22% and 23% for FY12-FY14.

While we have raised our forecasts, we have reduced our sum-of-parts based fair value to RM4.20, from RM4.35 previously. We are downgrading our recommendation on Genting Malaysia to “market perform” as we believe the slower progress of legalisation and hitches encountered in Genting Malaysia’s expansion plans into new geographical areas would cap share price movement at this juncture.

Potential catalysts that could help to re-rate the stock would be progress on the legalisation of gaming in New York and Miami, better-than-expected sustainable EBITDA margins in RWNY as well as better-than-expected and sustainable improvements in Genting UK’s operations.

Risks for the company include a slower-than-expected global and regional economic recovery, which could affect domestic sentiment and visitor arrivals; lifting of domestic subsidies for food and transportation costs, which would lower disposable income; and intensifying competition from regional players.

RWNY’s earnings have been fairly consistent, with average win per unit for year-to-date averaging US$364 per unit. Based on the disclosures given by the New York State Lottery Association, theoretically the Agent Commission of net win paid to the casino operator as compensation for operating the gaming facility is 38% of net win. 

Management believes that RWNY’s EBITDA margins could improve in FY12, given the absence of pre-operating expenses. We are maintaining our win per machine projection of US$330 per day. We project RWNY to record net profits of around US$40mil to US$50mil per year, contributing 8% to 10% to Genting Malaysia’s bottomline in FY12, FY13 and FY14.

Source: www.thestar.com.my