• According to press reports, a group of US lawmakers has sponsored a bill affirming the decision by the US Department of Interior to place 171 acres in Mashpee and 150 acres in Taunton in a trust.

• The Mashpee tribe was supposed to build a US$1bil casino on the land. Genting Malaysia (GenM) was appointed as the manager of the First Light Resort and Casino in April 2016. Also, GenM holds US$368mil worth of promissory notes issued by the tribe for the development of the casino.

• Neighbouring citizens had protested against the decision to place the land into the trust and the construction of the casino. In 2016, a US judge sided with the citizens but sent the decision back to the federal agency for further consideration.

• For the above bill to pass, it has to be approved by other lawmakers. If the bill is approved, opponents of the casino have said that they would appeal all the way to the Supreme Court.

• Hence, we believe that this would be a long and drawn-out case. It is uncertain if the Mashpee tribe would be able to start developing the casino anytime soon. The casino was supposed to have 3,000 slot machines, 150 gaming tables and 40 poker tables. GenM was supposed to be the manager for seven years from the opening of the casino.

• GenM has not recorded any provision or impairment in respect of its US$368mil investment in the tribe's promissory notes. A 50% impairment would translate into RM721.3mil, which would reduce the group's FY18F net profit by 43%.

• Maintain SELL on GenM with a fair value of RM4.95/share. GenM is presently trading at FY18F PE of 24.0x and FY19F PE of 20.8x.

Source: AmInvest Research - 26 Mar 2018