- Maintain HOLD on Genting Malaysia Bhd (GenM) with an unchanged RNAV-based fair value of RM4.30/share. GenM launched its “Genting Integrated Tourism Plan (GITP)” yesterday. We view GITP positively as it would position GenM in the next leg of profit growth.

- There are no changes to GenM’s FY13F to FY15F earnings forecasts as the impact of the GITP will only be felt in FY16F. Phase 1 of GITP is targeted for completion in FY16F.

- GenM would be spending RM5bil worth of capex at “Resorts World Genting” in total. We believe that GenM would not face any problems financing the capex due to its strong financial position. As at end-Sept 2013, GenM’s net cash stood at RM2.0bil.

- Capex under Phase 1 would amount to RM4bil over three years. Capex for Phase 2 would amount to RM1bil. Phase 2 is still under planning stages and GenM would provide updates progressively.

- Out of the RM4bil capex under Phase 1, about RM3bil would be allocated for the construction of the theme park, an additional cable car and a new hotel. The balance RM1bil would be used to refurbish and upgrade existing hotels.

- The 20th Century Fox theme park is estimated to cost RM1bil. This would be 20th Century Fox’s first international theme park. The theme park, which would cover 25 acres, would have more than 25 rides.

- The new theme park is expected to attract about four million visitors annually. The old outdoor theme park used to attract roughly three million visitors a year. Based on an average spending of RM50/person, the new theme park could record revenue of RM200mil.

- The new hotel, adjacent to “First World Hotel” is expected to cost about RM400mil. The three-star hotel would have about 1,300 rooms. This would increase hotel room inventory at “Resorts World Genting” to almost 11,300.

- The additional cable car line would have 100 gondolas. It would have the capacity to ferry roughly 4,000 visitors up and down the highlands resort every hour.

- Finally, there will also be a “Premium Outlet” at the highlands resort. Genting Plantations (GenP) would be launching its second premium outlet called “Genting Premium Outlet” at Awana by FY15F. Currently, the premium outlet is still under conceptualisation stage. 

Source: AmeSecurities