GENM  will  beef  up  its  allocation  for  the  proposed  Genting  Highlands facelift  to  MYR5bn  (from  MYR3bn).  The  redevelopment,  known  as  the Genting  Integrated  Tourism  Plan  (GITP), will  be  implemented  over  the next  10  years  in  collaboration  with  the  East  Coast  Economic  Region Development Council. We believe this may spur visitation interest in the long run.  Maintain NEUTRAL,  with our FV  revised upweard  to MYR4.56 (from MYR4.11).

• MYR1bn new outdoor theme park. Genting Malaysia (GENM) will raise its  capital expenditure on  the  proposed Twenty-First Century Fox theme park to MYR1bn (from MYR400m) to include more rides and attractions. The  revamped  25-acre  theme  park  will  feature  25  movie-themed  rides such as Ice Age, Rio and Alien as well as other cinematic attractions.
• Other details. As part of the initiatives under GITP, GENM also plans to add hotel rooms, premium retail outlets, a new cable car station as well as  a  performance  arena  that  can  accommodate  up  to  10,000  people. According to media  sources, the group is currently in talks with Simon Property Group, a US-based commercial real estate company,  with the view of setting up premium outlets in Genting Highlands. This is likely to be completed by 2015.
• Positive  surprise.  The  increased  allocation  for  the  proposed  facelift programme came as a positive surprise. We believe this redevelopment strategy will reinvigorate interest  in visiting  the hilltop  resort  (2013 visitor arrivals: 20m), and in turn propel growth of its gaming division in the long run.  We  are  forecasting  for  a  marginal  1%  annual  growth  in  visitor arrivals for FY13F-15F.
• Maintain NEUTRAL.  All  said,  we believe it  is too early to quantify the potential  impact  on  our  earnings  forecasts  as  the  facelift  will  only  be completed earliest by 2H2015, in our view. However, funding should not be  an  issue  given  GENM’s  sturdy  annual  operating  cash  flow  of  over MYR2bn. The group’s net cash stood at MYR2.0bn as of Sept 2013 .  In view of this positive surprise, which could boost visitor arrivals in the long run, we are removing the 10% discount pegged to our SOP previously. This lifts our FV to  MYR4.56  (from MYR4.11).  Maintain NEUTRAL given the limited upside.

Financial Exhibits

SWOT Analysis

• The group will focus on expanding its presence in New York and Miami over the medium term

Company Profile
Genting Malaysia is Malaysia's sole casino-cum-integrated leisure entertainment resort. It also has a presence in the UK and US.

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Source: RHB