Genting Malaysia to bag casino licence in New York?

Genting Malaysia to bag casino licence in New York?

Genting Malaysia Bhd (GENM) is seen among the front runners for a casino licence in the New York area, said Affin Hwang Capital.

KUALA LUMPUR: Genting Malaysia Bhd (GENM) is seen among the front runners for a casino licence in the New York area, said Affin Hwang Capital.

The state of New York is debating whether to issue up to three new casino licences for Downstate New York to help fund its financial year 2023 (FY23) budget, as it could expect to collect upfront fees of at least US$1 billion from this.

"It is reported by the press that if approved, both Resort World New York (owned by Genting Malaysia) and Empire City Casino would be front runners to win a license to convert their existing video lottery terminals (VLT) casino to a full fledged casino to include table games," it said in a note.

However, Affin Hwang said despite Resort World New York being viewed as a favourite to win one of the licences, there was still the risk that it might not succeed, given the award is based on competitive bidding.

The firm said Resort World New York could lose as much as 56 per cent of its gross gaming revenue (GGR) by 2025, if the licence was awarded to other parties located in or near New York City (NYC).

"We believe the biggest argument against Resort World New York's case is that the state would secure additional gaming tax revenue of around US$286-355 million in the long run.

"This is because the expected gross gaming revenue (GGR) would be 17-20 per cent higher than in a conversion of a current VLT location in NYC," it said.

Affin Hwang said Genting Malaysia's United States (US) operations accounted for 14 per cent of its revalued net asset value (RNAV) valuation.

The firm estimates that the conversion of a VLT to a commercial casino will contribute additional earnings before interest, taxes, depreciation and amortization (EBITDA) of around US$60-78 million (RM250-327 million) by 2025.

"It would also raise the fair value of Genting Malaysia by as much as 17 per cent.

"However, we are still maintaining our Hold call and target price at RM3.00, as we have not factored in the option value from the potential licence win," it added.

https://www.nst.com.my/business/2022/04/786637/genting-malaysia-bag-casino-licence-new-york