- Genting Malaysia Bhd (GenM) has proposed to acquire a piece of land adjacent to Resorts World Bimini, Bahamas from RAV Bahamas Ltd for US$24.6mil (RM78.7mil).

- RAV Bahamas holds a 30% stake in Resorts World Bimini.

- Also as part of the acquisition, debts of US$66mil owing by Resorts World Bimini to GenM will be capitalised.

- As a result, GenM’ shareholding in its Bahamas’ operations will increase to 78% while RAV’s stake will be diluted to 22%.

- GenM has also entered into an option agreement with RAV Bahamas, which will allow GenM to acquire an additional 103.4 acres of undeveloped land in the same area. The option can be exercised at any time before 19 March 2016.

- We believe that RAV Bahamas is GenM’s local partner in Bahamas. RAV Bahamas is a real estate development and construction company in the Bahamas.

- We are marginally positive on this development as GenM would be able to take ownership of the land on which it is building a hotel. Currently, GenM is building a 307-room hotel on the land as part of Resorts World Bimini.

- The new hotel and jetty are expected to be completed by the end of the year. The cost of both components is estimated at US$200mil.

- Resorts World Bimini recorded revenue of RM39.4mil and negative EBITDA of RM104.5mil in 1HFY14.

- Maintain BUY on GenM. GenM’s net profit growth is expected to resume in FY15F underpinned by additional hotel rooms at Resorts World Genting, Malaysia. GenM is also in the running for a casino licence in upstate New York. Winners of the four casino licences are envisaged to be announced at the end of the year.

Source: AmeSecurities