Journey to Wealth
Genting Malaysia - Building casino in Bahamas BUY
- According to the Miami Herald newspaper, Genting Malaysia Bhd (GenM) is planning to build a luxury boutique casino at Bimini Bay Resort and Marina in North Bimini Island, Bahamas.
- GenM will be partnering RAV Bahamas, which is the developer of Bimini Bay and the Rockewell Island.
- North Bimini Island is accessible by a half-hour flight or 2 '' hour boat trip from South Florida. Bimini Island has roughly 50,000 visitors annually.
- The casino has already been approved by the Bahamian Government. According to sources quoted in the Miami Herald, the casino will cost about US$20mil (RM64mil).
- The casino will have space of 10,000 sq ft, featuring full-scale table games, slots and sports betting. It is scheduled to open in December 2012.
- We are neutral on this development. We are unsure if GenM would use the proposed casino at North Bimini Island to support the case for legalising casinos in Florida.
- Lawmakers are scheduled to debate on the legalisation of full-fledged casinos in Florida in early-2013. Recall that the casino bill in Florida was postponed early this year due to the lack of support.
- The proposed casino at North Bimini Island would be small, almost similar to GenM's clubstyle casinos in Britain.
- Based on the gaming space of 10,000 sq ft, we estimate that the casino would have 35-40 gaming tables only. The casino is not expected to contribute significantly to GenM's net profit.
- Financing the development cost of the casino is not expected to be a problem for GenM as it has gross cash of RM2.1bil (excluding restricted cash) as at end-FY11.
- We maintain a BUY on GenM for its profit growth underpinned by 'Resorts World New York'and casino operations in Malaysia. The group's casino operations in Britain are also expected to benefit from the London Olympics, which would take place this month.
Source: AmeSecurities
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