- Genting Malaysia Bhd (GenM) announced that Resorts World Birmingham, UK will open at 10 am, Wednesday, 21 October 2015. The first day will see retailers such as Next Outlet and Nike opening their stores.

- Genting International Casino will open on 26 October 2015 together with the launching of the new James Bond movie.

- The development cost of Resorts World Birmingham is estimated at 150mil pounds (RM801.3mil) in total. Construction of the resort cum casino started in early-2013.

- We are positive on the opening of Resorts World Birmingham although its earnings contribution to GenM is not expected to be significant.

- Resorts World Birmingham would help smooth the volatility of GenM’s UK division. Earnings of GenM’s UK division have been volatile mainly due to the luck factor of the clubstyle high-end casinos in London.

- In 2QFY15, the performance of the UK division was exacerbated by higher write-off of bad debts and a fall in the volume of business. The UK division recorded a loss of RM99.9mil in 2QFY15.

- We estimate that Resorts World Birmingham would improve GenM’s EBITDA in FY16F by 1% to 2%. This assumes an average win per table of US$2,000, average win per slot machine of US$200 and an EBITDA margin of 20%.

- The casino at Resorts World Birmingham is relatively small as it is expected to have only 30 gaming tables and 150 slot machines and electronic table games. In comparison, Resorts World Bimini, Bahamas has about 20-30 gaming tables and about 100 slot machines and electronic table games. Resorts World Bimini recorded a smaller loss of US$30.5mil in 1HFY15 versus US$32mil in 1HFY14.

- Maintain HOLD on GenM. The group’s new retail complex at Resorts World Genting, Malaysia is expected to be completed in 2HFY16 while the new theme park is anticipated to open at end-FY16F.

Source: AmeSecurities Research - 8 Oct 2015