Highlights

• According to Las Vegas Review-Journal, Resorts World Las Vegas (RWLV) is expected to break ground on 5 May 2015. The development of RWLV has been on-going for 2 years now when the group announced back in early-March 2013.

• To recall, the first phase of the development would include 3,000 hotel rooms and a casino with a combined 3,500 slot machines and table games. RWLV would also have 30 F&B outlets, a 4,000-seater theatre and an elaborate garden.

• According to Michael Levoff, Genting’s VP of Corp. Comms, the preliminary work had been done on the site. It has also renewed building permits and is finalizing the development agreement with Clark County.

• However, GenT would still need to apply for a full gaming license before RWLV can open. We understand from previous earnings conference call that the license can only be applied approx. 6 months before RWLV’s completion.

• As we gather that the development would take 24-36 months to complete, we are maintaining our view that it would open by 2HFY17. This is also in-line with the GenT’s expectations to open RWLV by near end-2017. Do note that GenT plans to incorporate 80-85% of the existing (Echelon) buildings that Boyd Gaming has started (back in 2008) in RWLV.

• Furthermore, we believe it would be more sensible for the group to complete its first phase soonest possible in order to tap into Las Vegas Strip’s (LVS) recovering economy. Although 2014 experienced a slight dip (-2.1%) in gaming revenue, we view this as temporary. Furthermore, January 2015’s gaming revenue have recorded a tremendous growth of 15.4% yoy.

• We continue to be positive on the development as we believe an additional international coverage to the group’s portfolio, especially within its core expertise, would be beneficial. Should RWLV be completed by 2017, FY18 would be a quantum leap year for GenT, alongside with its subsidiary, GenM’s opening of Twentieth Century Fox World.

Risks

• 1) Regulatory risk; 2) Weaker hold percentage; 3) Pandemic breakouts; 4) Appreciation of RM; 5) Higherthan- expected cannibalisation from Marina Bay Sands (MBS) and Macau casinos; 6) Annual renewal on RWS’s junket license.

Forecasts

• Unchanged.

Rating

HOLD

Positives

• (1) Defensive stock; and (2) New sources of earnings from international markets to drive earnings growth.

Negatives

• (1) Highly regulated industry; and (2) Leisure and hospitality’s earnings highly dependable on luck factor and hold percentage.

Valuation

Maintain HOLD with unchanged target price of RM9.42 based on SOP valuations.

Source: Hong Leong Investment Bank Research - 30 Mar 2015