PENDING CASINO LICENCE: Photo shows an artist’s impression of RWM. Analysts maintain their positive outlook on the US$3 billion venture despite uncertainties concerning their acquisition of a casino licence.
KUCHING: Analysts maintain their positive outlook on Genting Malaysia Bhd’s (Genting Malaysia) US$3 billion Resorts World Miami (RWM) venture despite uncertainties concerning their acquisition of a casino licence.
According to Kenanga Investment Bank Bhd (Kenanga Research) in a research report yesterday, the positive outlook was due to the prime waterfront location of the development in Florida.
“We remain positive on the venture even if it is without casino element given it is a prime waterfront land in Florida.
“If the project is without casino facility, it may need a much longer period before it can reach breakeven,” highlighted the research team.
Kenanga Research also saw little problem for Genting Malaysia to venture into the project due to its strong balance sheet, whereby the group has a cash position of RM4.05 billion as at June 30, 2011.
“Currently, the Florida state law limits casinos from expanding beyond businesses operated by the Indian tribe and selected racetracks and ‘jai alai frontons’.
“The state has three forms of casino gambling, namely casino boats, Indian casinos and gaming machines at parimutuels in two South Florida counties.”
Kenanga Research noted that gaming giants led by the Las Vegas Sands have been lobbying to persuade lawmakers to allow for full casino gambling at so-called “destination resorts” in Florida.
On the other hand, ECM Libra Capital Sdn Bhd (ECM Libra) maintained its ‘hold’ call on Genting Malaysia as a result of the uncertainties surrounding RWM.
“Given the uncertainties surrounding its venture to Miami, we have yet to factor in the potential earnings contribution into our model.
“As indicated by management, the construction progress of the resort in Miami is largely hinged on whether the group is able to get a casino licence,” it underscored.
To recap, Genting Malaysia had recently unveiled a US$3 billion plan for RWM that could be completed within three to five years.
Depending on the approval of the Floridian legislature and governor’s approval, RWM would include a casino.
RWM was slated to include four hotels and two residential towers which were to sit atop an eight-storey podium with luxury retail galleries, restaurants, lounges, bars and entertainment area that was to showcase the music and culture of Florida and South America.
The property would also have ample convention and meeting space with 700,000 square feet of space allocated for this purpose.
Thus, ECM Libra’s target price for Genting Malaysia was pegged at RM3.42 per share while Kenanga Research maintained its price target of RM4.40 per share.