KUALA LUMPUR (Sept 11): Maybank Investment Bank Research has identified two significant developments in the United States that could serve as catalysts for Genting Malaysia Bhd (GenM)’s growth, translating to a possible upside of up to 31%, for its current target price (TP) of RM2.77.
Firstly, the New York State Gaming Commission has resumed the request for application (RFA) process for three downstate commercial casino licences, which bodes well for GenM, according to the house.
Additionally, there are indications that the Mashpee Wampanoag tribe, which is indebted to GenM, may be exploring options to revive the construction of its own integrated resort, the First Light Resort & Casino (FLRC), it added.
In an optimistic scenario, these developments could result in a 74% increase in long-term (FY2025) earnings estimates and a 31% boost to the discounted cash flow target price (DCF-TP), reaching RM3.62, Maybank IB said. It maintained its recommendation at a target price of RM2.77.
“The ‘blue sky’ TP implies an attractive upside potential of 40%. Our GenM earnings estimates and RM2.77 DCF-TP are unchanged for now. With over 10% upside potential from existing operations and potentially another over 30% upside potential from the two catalysts...,” it said.
Revival of RFA process for commercial casino licences in New York
After a period of silence lasting over six months, the New York State Gaming Commission has restarted the RFA process for three commercial casino licences in the downstate area.
It said this development is expected to work in favour of GenM, particularly due to its wholly owned Resorts World New York City (RWNYC), which has a competitive edge thanks to its existing infrastructure and ability to generate additional tax revenue quickly.
“We have long viewed GENM’s 100%-owned RWNYC to win one, as it can deploy table games and generate additional tax revenue for New York State quickly, thanks to its existing infrastructure. Our calculations indicate that a downstate commercial casino licence can accrete incremental core net profit of circa RM610 million and 53 sen to our TP,” it added.