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Does Genting Malaysia (GENM) worst is over, bottom out ? is GENM = Gems for Golden year in 2020 & Beyond?  
 
Based on analysts latest site visit & talk to mgmt, actually Genting Malaysia (GENM - 4715) outdoor theme park is almost to near completed right now. GenM OTP is near to full 100% work complete on the theme park structures. All construction and work development are done since early Dec'2019, currently waiting to allow for 3-4months months of rides testing. “Fox Disney” would need to provide “final certification,” before anything could open, noted the analyst. 
 
OTP described as 26 acres (10.5-hectares) in area – expected to soft opening in the third quarter of 2020, with 20 rides at that stage – four of them rollercoaster-type attractions – using “Fox intellectual property”. The latter was a reference to the Fox entertainment brand. Assets of that brand were recently subject of a takeover move by Walt Disney Co, that was clinched in March.
 
When construction of Resorts World Genting’s outdoor theme park is completed it will have 25 rides, “of which two will run underground,” suggested Maybank. “For the remaining five rides, Genting Malaysia may employ intellectual properties from other studios but has not decided on which ones yet. This is why the outdoor theme park cannot re-assume its previous name, 20th Century Fox World,” wrote Mr Yin.
 
‘Dynamic pricing’
 
In July Genting Malaysia said it had reached a settlement “fully resolving” a US$1-billion lawsuit versus several entities of the Fox entertainment brand and the Walt Disney Co. Mr Yin gave guidance in his Monday memo that Genting Malaysia management expected the theme park to have circa 1,100 employees, 40 percent of whom had already been hired, with the remainder due to be taken on “three to four months” before the soft opening.
 
Genting Malaysia now does not provide guidance on average ticket prices, expected ticket price approximately MYR200 previously. The casino firm had given guidance it would use “dynamic pricing” for the facility – i.e., higher prices during peak periods and lower ones at other times – and that there would be “no distinction” in ticket pricing between Malaysians and non-Malaysian patrons.
 
The outdoor theme park would have seven restaurants – three of them “outsourced” and 11 food kiosks, said Maybank. “Initially, the outdoor theme park will run for 10 hours a day. That said, Genting Malaysia stated that the outdoor theme park could run for longer during weekends and anniversaries going forward.”
 
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Genting Malaysia bets on better hand in 2020 with theme park launch

 
 
 
 
 
 
 
This article first appeared in The Edge Malaysia Weekly, on December 23, 2019 - December 29, 2019.
 
-A+A
 
THE year has not exactly been the best for Genting Malaysia’s stock, which has been underperforming and is trading at valuations near 10-year lows. Will the gaming company be dealt a better hand in 2020? Some in the investing community are hopeful that it might open its outdoor theme park earlier than the second half of next year.
“The tentative plan is to open it in the third quarter of next year but if all goes better than expected, there is an expectation that it could be earlier than that. Some rides are already being tested,” says a gaming analyst who made a site visit. A senior executive with Genting Group declined to comment, only stating that the group will make an announcement on the opening when the time is right. Amid considerable interest in the launch date, Genting Malaysia’s share price has slipped to levels that have courted the interest of analysts.
Macquarie Equities Research recently initiated coverage on the counter with an “outperform” rating and a target price of RM3.75 — a 14% upside to last Wednesday’s close of RM3.22. “Despite the company’s margins performing below their structural potential, Macquarie Research sees a lot of opportunities in the longer term and is positive on Genting Malaysia, and believes that the company is focused on rebuilding investor confidence, which reduces near-term risks,” it states in a Dec 12 report.
Genting Malaysia is its “highest conviction pick in Asia gaming”. The foreign research house does not believe the stock’s seven times enterprise value multiple reflects the group’s high base mass exposure in the country, which offers consistent cash flow. Rather, it believes investors in Genting Malaysia should apply a similar multiple as US regional gaming stocks that are trading at about eight times, given similarities in free cash flow (FCF) generation and mature growth outlook.
Macquarie Research’s RM3.75 target price was arrived at by applying eight times multiple to its 2021 forecast, implying an 18% upside in addition to Genting Malaysia’s stable 6% dividend yield. “Meanwhile, with FCF ramping in 2021 and beyond, Macquarie Research sees Genting Malaysia’s 11% FCF yield supporting both deleveraging and enhanced capital returns to shareholders,” it adds.
Another foreign research house, UOB Kay Hian Research, upgraded its call on Genting Malaysia to an “overweight” last month, and upped its target price to RM3.60 from RM3.16 in November. “The outdoor theme park will significantly enhance Genting Malaysia’s status as a provider of world-class entertainment and further boost its tourist patronage. Assuming 9,000 visitors per day, average spending of RM260 per pax (including F&B spending) and Ebitda (earnings before interest, taxes, depreciation and amortisation) margin of 30%, Genting Malaysia can rake in RM256.2 million Ebitda per year,” it estimates.
Also turning more positive about the stock is RHB Research, which has upgraded its earnings estimates and backed its “buy” call with an increased target price of RM3.96.“As we obtain greater clarity on the outdoor theme park plus Empire Resorts’ recent positive Ebitda quarter, we believe sentiment will improve, especially on a strong set of results, while valuations remain at trough,” RHB Research notes in a Nov 29 report.
“We increase our FY19F to FY21F earnings [by] 3.3%, 0.4% and 2.2% [respectively], as we lift our margins assumption following the strong set of results. Accordingly, we lift our target price. While the environmental, social and governance de-rating from the related-party transaction is not a distant memory yet, we believe the steep price correction (more than RM2 billion) has been overdone,” it adds.The gaming stock has been trading at an average of RM3.15 for the year (up to Dec 18) — more than 20% below its five-year average price of above RM4.
It started the year below the RM3 level at RM2.85 after hitting a five-year low of RM2.633 on Dec 14 last year.
The stock has been hovering at the RM3 level this year — a shadow of the RM4 levels it enjoyed over 2017 to 2018 before it was hit in November last year after the government announced a 10% hike in gross gaming revenue taxes. Genting Malaysia’s share price then tumbled by a whopping 20%. Then, in August this year, the shares fell another 12% intraday after Genting Malaysia announced the acquisition of a substantial stake in lossmaking Empire Resorts, angering investors.
Maybank Investment Bank Research opines in a Nov 29 report that investors will “stay on the sidelines until they get a handle of the losses generated by Empire Resorts”. It expects 4Q2019 to be sequentially stronger for Resorts World Group due to “seasonally more visitors”.
https://klse.i3investor.com/blogs/Genm_VisitMsia2020/2020-01-13-story-h1482151063-Does_GENM_worst_is_over_bottom_out_Is_GENM_Gems_for_Golden_year_in_2020.jsp

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