All eyes on Genting’s New York casino unit
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PETALING JAYA: Genting Malaysia Bhd’s wholly-owned subsidiary, Resorts World New York City (RWNYC), is in a good position to win one of the three downstate commercial casino licences offered by the New York State Gaming Commission (NYSGC).
The NYSGC has launched a request for information (RFI) on three downstate commercial casino licences after a four-month delay, according to Maybank Investment Bank (IB) Research.
“If it does (win), we estimate that RWNYC can accrete around US$145mil or RM610mil in net profit per year and RM0.53 to its discounted cash flow-based target price,” the research firm said in a note to clients where it maintains a “buy” call on the stock with a RM3.40 target price for now.
Maybank IB said the commission launched the RFI for interested parties for its planning purposes. This was to seek information to determine the appropriate size and scope of development and the value of the gaming facility licence, among others.
It said the deadline for submission of questions is on Nov 10 and the deadline for RFI response submission is Dec 10, 2021.
Subsequently, NYSGC will prepare and distribute a report with the results of the RFI to the New York governor and state legislature no later than six months after the Dec 10 deadline.
“If NYSGC proceeds to launch a request for proposal, we opine that RWNYC will have an edge as it can deploy table games and generate additional tax revenue for New York state quickly as opposed to a greenfield casino,” said Maybank IB.
RWNYC currently offers only slot machines and lacks table games. Should it be allowed to be converted into a downstate commercial casino, the research firm said it would bring its “blue-sky” Genting Malaysia’s target price to RM3.93.
UOB Kay Hian Research (UOBKH) in a recent report said the potential of RWNYC obtaining a full-fledged casino licence after New York’s upstate casinos’ exclusivity period ends in 2023 is a captivating catalyst.
It added that the potential addition of casino tables, which should attract a much lower gaming tax rate versus its existing electronic gaming devices, could significantly lift RWNYC’s return on equity.
It added that the US$400mil (RM1.66bil) Hyatt Regency JFK at RWNYC, which was officially opened in August this year, should meaningfully contribute to earnings in 2022.
Elsewhere, it noted that Resorts World Catskills (RWC) had become Ebitda (earnings before interest, taxes, depreciation and amortisation) positive again in the second quarter of 2021, after gross gaming revenue surged more than 40% quarter-on-quarter to reach pre-Covid-19 levels.
Locally, the long-awaited opening of Genting Skyworlds is expected to stoke swift earnings recovery for Genting Malaysia’s flagship integrated resort, Resorts World Genting (RWG), said UOBKH.
The research firm conservatively expects SkyWorlds to eventually boost the company’s Ebitda by RM256.2mil per year based on the assumption of 9,000 visitors a day and an average spending of RM260 per person.
However, it expects the company to post losses of around RM400mil in the third quarter of 2021, as RWG remained shuttered throughout that period and after factoring in management’s commendable efforts in lowering the daily burn rate to RM4mil, inclusive of interest costs.
