News  Yesterday, Genting Malaysia Bhd (GENM) announced that its indirect wholly-owned unit

Resorts World Omni LLC had entered into an agreement with: (i) Gulfstream Park Racing Association Inc, which is the owner and operator of Gulfstream Park Racetrack and Casino, Gulfstream Park Thoroughbred After Racing Program Inc. (GPTARP), (ii) The Florida Horsemen’s Benevolent & Protective Association Inc and, (iii) the Florida Thoroughbred Breeders’ Association to establish a multi-party relationship with respect to potential casino operations and pari-mutuel simulcast wagering at Resorts World Omni Centre in Miami.

 The agreement is to be completed upon the receipt of all requisite approvals, including the relocation of GPTARP’s non-profit thoroughbred permit and issuance of corresponding licenses.

 Under the partnership, the initial step is to enable GENM to create a leisure and entertainment resort, which includes a gaming facility with 2,000 slot machines.

Comments  This announcement came in after reports that were widely published yesterday in the foreign newswires and the local The Financial Daily.

 It is still too early to gauge the earnings/financial impact to GENM as it is currently seeking regulatory approval. Given that the legislators have twice rejected “destination resorts” proposal that would allow the creation of at least two sizeable casino resorts in the state of Florida, the regulatory approval remains the key hurdle.

 Pending the regulatory approval, we remain neutral on the GENM’s venture in Miami.

Outlook  The RM5b 10-year refurbishment program will be a structural change to its home turf operation and act as an earnings catalyst from 2016 onwards. On the other hand, the yield management initiative should help to improve earnings while the RWNYC numbers should be sustainable. However, the UK operations could continue to see tougher times due to its VIP-centric nature.

Forecast  We are keeping our FY13-FY15 estimates unchanged

Rating Maintain MARKET PERFORM

Valuation  Our target price is maintained at RM4.39/SoP share.

Risks to Our Call Unfavourable luck factor

Source: Kenanga