Comments

• We attended the introduction of Resort World Genting’s (RWG) Brand Ambassador and official launch of Horizon 50 yesterday at Genting Highlands.

• GenM COO Datuk Seri Lee Chong Yan yesterday have introduced us a new brand ambassador, Tan Sri Michelle Yeoh, to enhance the brand globally as the resort enters a new era of transformation.

• With a world renowned name, we believe having Tan Sir Michelle Yeoh would further benefit the group by attracting more international tourist into the revamped resort upon completion in 2016 (we presume to be in 2HFY16).

• Apart from that, GenM have also introduces its latest Genting Integrated Tourism Plan (GITP), Sky Avenue (450k sf) and Sky Plaza (152k sf), a lifestyle shopping mall incorporating renowned retail outlets and F&Bs.

• Horizon 50 is an event to be celebrated by the group throughout 2015, in conjunction with RWG’s 50 th anniversary. Despite the year-round event, GenM is said to have their grand celebration sometime in Aug 2015.

• Apart from these two agendas, it also unveiled the details of its new cable car to be built, connecting mid -hill to Twentieth Century Fox World (TCFW). We view this initiative positively as it would transport visitors (4k/hour) straight to its largest attraction and to split visitors with different objective (entertainment vs. casino). To note, their existing cable car transports visitors from mid-hill to Genting Grand Hotel, where the main casino is located.

• With the transformation plan, GenM aims to attract 26m local and foreign tourists in 2018, increasing to 30m by 2020. We believe the visitation forecasts by the group can be achieved given that the resort’s new transformation will not only have returning visitors, but also new tourists who wish to experience RWG’s TCFW.

Risks

• Regulatory risk;
• Weaker hold percentage;
• Pandemic breakouts;
• Cannibalization from Macau & Singapore;
• Appreciation of RM; and
• Bill on full gaming operations in New York not approved.

Forecasts

• Unchanged.

Rating

HOLD

Positives

• (1) Defensive stock; (2) Monopoly in theindustry; and (3) New and potential sources of earnings from international markets to drive earnings growth

Negatives

• (1) Highly regulated industry; and (2) earningshighly dependable on luck factor and hold percentage

Valuation

• Maintain HOLD call on GenM with unchanged TP of RM4.16 based on SOP valuations.

Source: Hong Leong Investment Bank Research - 5 Dec 2014