- Genting Malaysia Bhd (GenM) announced that it has launched “Resorts World Bimini”, which is a boutique resort and casino in the Bahamas. The group has also launched “Bimini SuperFast”, a 32,000 tonne cruise ship that will sail between Miami and Bimini twice daily.

- “Resorts World Bimini” is located less than 50 nautical miles or two hours away from the city of Miami. The 750-acre beachfront resort contains villas, restaurants, a fisherman’s village with shopping and dining options as well as the largest marina in the Bahamas.

- We view this positively although we reckon that the US$100mil “Resorts World Bimini”casino resort is not expected to contribute significantly to GenM’s bottomline. This is due to its small size.

- “Resorts World Bimini” is expected to have 20-30 gaming tables and 100 slot machines only.

- Based an average table win of US$5,000/day, slot win of US$220/day and EBITDA margin of 20%, we estimate the EBITDA of “Resorts World Bimini” at US$13.4mil or RM42.7mil a year. This would increase GenM’s FY14F EBITDA by 2%. We have also assumed that non-gaming activities would account for 20% of total revenue at “Resorts World Bimini”.

- According to the Casino Taxation Act of Bahamas, a casino with floor space of 10,000 sq ft or more would be imposed a tax of 5% on gross winnings of more than US$20mil.

- If the casino space is less than 10,000 sq ft, then the tax would be 15% on gross winnings of more than US$10mil. “Resorts World Bimini” has a casino space of 10,000 sq ft.

- “Resorts World Bimini” is not expected to be the only casino in the Bahamas. The Baha Mar casino resort project in Nassau will have a 100,000 sq ft casino with more than 150 gaming tables and 1,500 slot machines upon completion.

- The US$3.5bil Baha Mar project is currently being built by China State Construction Engineering Corp. It is expected to be completed by 4QFY14.

- We maintain BUY on GenM for its resilient casino operations in Malaysia and New York. GenM’s valuations are also undemanding as reflected in its FY14F PE of 13.4x.

Source: AmeSecurities