GENM (4715) : Genting Malaysia - Aiming for the Sky
Target RM5.90 (Stock Rating : ADD)
As part of the Genting Integrated Tourism Plan (GITP), GENM unveiled the blue print of its Sky Avenue and Sky Plaza, a c.400,000 sq. ft open-sky concept offering retail and dining, scheduled for launch in 2015. We estimate that this increases its existing F&B space sevenfold. The impact on EPS is negligible but the main benefit, combined with the opening of Genting Premium Outlets in Awana (by end-2015) and theme park (in early 2016), should drive strong visitation, and by extension, casino visitation and revenues. GENM expects to increase annual visitation from 20m in 2014 to 30m by 2020. We maintain our FY14-16 forecasts, RNAV-based target price and Add rating. The potential re-rating catalysts are a New York casino win and newsflow on GITP updates.
What Happened
During a glitzy ceremony in Genting Highlands that was attended by the media, its business partners, bankers and analysts, GENM unveiled 1) its brand ambassador, Tan Sri Michelle Yeoh, 2) Horizon 50, a new state-of-the-art gallery that showcases GENM’s past, present and future and 3) Sky Avenue and Sky Plaza, an impressive c.400,000 sq ft open-sky concept that will feature al fresco and open-deck dining, retail and a cinema complex (target launch in 2015).
What We Think
Sky Avenue/Plaza concept was a positive surprise as GENM had kept it closely under wraps. We estimate that GENM currently has about 70,000 sq ft of F&B space, mainly catering for the mass market. Sky Avenue/Plaza will increase this sevenfold and target more affluent customers/tourists. It will be another visitation catalyst, in addition to the opening of Genting Premium Outlets and the 20th Century Fox theme park. Our channel checks revealed that the first phase of the new theme park is likely to be launched in early 2016, which reinforces our confidence in our FY16 EPS forecast that is 16% above consensus. In a separate development, several newswires reported that a decision on the four NY upstate casinos could be announced on Dec 17, when the final meeting of the board that is reviewing the applications is scheduled.
What You Should Do
GENM remains our top pick in the gaming sector and investors should take advantage of the recent price dip to accumulate the stock ahead of a potential NY casino decision on Dec 17. In 2015, we expect more positive newsflow on GITP developments to drive GENM’s re-rating.
Source: CIMB Daybreak - 05 December 2014
Target RM5.90 (Stock Rating : ADD)
As part of the Genting Integrated Tourism Plan (GITP), GENM unveiled the blue print of its Sky Avenue and Sky Plaza, a c.400,000 sq. ft open-sky concept offering retail and dining, scheduled for launch in 2015. We estimate that this increases its existing F&B space sevenfold. The impact on EPS is negligible but the main benefit, combined with the opening of Genting Premium Outlets in Awana (by end-2015) and theme park (in early 2016), should drive strong visitation, and by extension, casino visitation and revenues. GENM expects to increase annual visitation from 20m in 2014 to 30m by 2020. We maintain our FY14-16 forecasts, RNAV-based target price and Add rating. The potential re-rating catalysts are a New York casino win and newsflow on GITP updates.
What Happened
During a glitzy ceremony in Genting Highlands that was attended by the media, its business partners, bankers and analysts, GENM unveiled 1) its brand ambassador, Tan Sri Michelle Yeoh, 2) Horizon 50, a new state-of-the-art gallery that showcases GENM’s past, present and future and 3) Sky Avenue and Sky Plaza, an impressive c.400,000 sq ft open-sky concept that will feature al fresco and open-deck dining, retail and a cinema complex (target launch in 2015).
What We Think
Sky Avenue/Plaza concept was a positive surprise as GENM had kept it closely under wraps. We estimate that GENM currently has about 70,000 sq ft of F&B space, mainly catering for the mass market. Sky Avenue/Plaza will increase this sevenfold and target more affluent customers/tourists. It will be another visitation catalyst, in addition to the opening of Genting Premium Outlets and the 20th Century Fox theme park. Our channel checks revealed that the first phase of the new theme park is likely to be launched in early 2016, which reinforces our confidence in our FY16 EPS forecast that is 16% above consensus. In a separate development, several newswires reported that a decision on the four NY upstate casinos could be announced on Dec 17, when the final meeting of the board that is reviewing the applications is scheduled.
What You Should Do
GENM remains our top pick in the gaming sector and investors should take advantage of the recent price dip to accumulate the stock ahead of a potential NY casino decision on Dec 17. In 2015, we expect more positive newsflow on GITP developments to drive GENM’s re-rating.
Source: CIMB Daybreak - 05 December 2014
