-  The Press reported that Genting Group may be close to securing a casino venture in Sri Lanka.

-  The news report said that last year, the Sri Lanka Government approved the development of three integrated resorts, one of them to James Packer, which controls Crown Ltd.

-  Crown is planning a US$350mil integrated resort in the heart of Colombo with local casino operator Ravi Wijeratne, who owns two casinos approvals in Sri Lanka.

-  Dhammika Perera, who has approval to build a US$300mil casino resort, was reported to be looking to lure a US or Asian gaming group. The third casino project costing US$650mil will be built by John Keells Holdings, which is a local conglomerate.

-  Incidentally, Perera is Sri Lanka’s Transport Ministry Secretary and he operates three out of four of the country’s licensed casinos.

-  We are neutral on this development. We do not think that casino revenues would be significant due to the small size of the market. We believe that the targeted market would be tourists from India.

-  Most of Sri Lanka’s visitors are from India, which accounted for 16.4% of Sri Lanka’s tourists in 2012. This was followed by UK (10.8% of tourists) and Maldives (6.2% of tourists). Number of tourists to Sri Lanka rose by 26.7% to 1.27mil in 2012.

-  We believe that Genting Group is busy with various projects around the world currently. Genting Singapore has its eyes on Japan and is expected to start the construction of the US$2.2bil “Resorts World Jeju” in 2HFY14.

-  Genting Malaysia is busy with its Genting Integrated Tourism Plan (GITP) at “Resorts World Genting” with RM5bil worth of capex. GenM is also waiting for the casino law in Miami to be passed.

-  Maintain HOLD on Genting Bhd. 

Source: AmeSecurities