GITP progresses well for Genting Malaysia
KUCHING: Genting Malaysia Bhd’s (Genting Malaysia) soft launch of its the Genting Highlands Premium Outlets mid- June marked another key milestone for the progress of its Genting Integrated Tourism Plan (GITP).
Upon opening the first and second floors of Sky Casino on March 30 – which cater to the mass market – the group is planning to open the third and fourth floors of Sky Casino, which are for VIP and gold card members in the third quarter of financial year 2017 (3QFY17).
The group has progressively launched Sky Avenue and Sky Plaza shopping malls since end-2016. Besides that, Genting Highlands Premium Outlet was soft launched in mid- June.
“We expect the number of visitors to improve from 19 million in 2015 to 24 million by 2018, on track to meet its target of 30 million by 2020,” said AllianceDBS Research Sdn Bhd (AllianceDBS Research) in an update yesterday.
“The increased visitations, coupled with the potential availability of 300 new gaming tables, are expected to drive its earnings.”
The group announced that the total capex for GITP will increase from the initial RM5 billion to RM10.4 billion. We understand that the total capex for Twentieth Century Fox World theme park will increase from RM1 billion to RM2 billion.
The group will also need to improve infrastructure and accommodation to cater for an expectedadditional7,000newjob opportunities in Genting Highlands.
Nonetheless, we understand that the outdoor theme park could be delayed to 2Q2018 (vs previous target of end-2017).
We believe that the RM10.4bn GITP makeover will come with 250 new gaming table capacity situated in Sky Plaza, >40 per cent from 550 gaming tables currently.
On the other hand, the researh firm do see potential downside risks on Genting Malaysia’ss investment on the First Light Resort and Casino project.
“To recap, back in April 2 016, Genting Malaysia invested US$ 249.5 million interest- bearing promissory notes issued by the Mashpee Wampanoag ( WM) Tribal Gaming Authority for the initial development phase of the First Light Resort and Casino in Taunton, Massachusetts, US.
“In return, it was appointed as the manager of the casino for seven years from the opening date. Nonetheless, development of the project hit a stumbling block due to an ongoing lawsuit against the tribe questioning the legality of the NativeAmerican status.
“In July 2016, federal district court judge issued an unfavourable ruling against the WM tribe and we understand the tribe will appeal the ruling and explore
Other avenues to protect its land in trust designation. We do not discount the possibility that this could turn out to be a long drawn- out legal proceeding.
“For now, we understand that there is no provisioning need for Genting Malaysia’s US$249.5 mill ion investment into interestbearing promissory notes issued by the (WM) Tribal Gaming Authority.
“Nonetheless, the group may need to write down this investment should the final verdict turn out to be unfavourable to the tribe and the casino development fails to proceed.”