KUALA LUMPUR (March 24): Analysts are positive that Resorts World Las Vegas (RWLV), a subsidiary of Genting Bhd (KL:GENTING), will retain its non-restricted gaming licence after paying a hefty fine to the Nevada Gaming Control Board (NGCB).

"The fine accounts for less than 5% of Genting’s FY2025 earnings (estimated for the financial year ending Dec 31, 2025). More importantly, we believe the settlement will encourage gamblers to return to RWLV," said Maybank Investment Bank in a note on Monday.

RWLV recently said it would pay a US$10.5 million (RM46.41 million) fine as part of its final settlement with the NGCB regarding a complaint filed on Aug 15, 2024.

Without admitting or denying the allegations, RWLV has opted to settle the matter rather than proceed to a hearing, citing cost and uncertainty as key considerations, noted the research house.

Moving forward, Maybank IB believes RWLV will recover financially. It noted that RWLV’s 4QFY2024 earnings before interest, taxes, depreciation, and amortisation (Ebitda) had plunged to approximately US$1.5 million below its FY2023 quarterly average of US$48.8 million.

“We believe that some gamblers avoided it while it was being investigated by the NGCB. Our experience tells us that gamblers, whether guilty of wrongdoing or not, tend to avoid casinos under investigation for fear of being investigated themselves,” said the firm.

Maybank IB is keeping its earnings estimates and maintaining its 'buy' call on Genting, with a target price of RM3.98, reflecting a 67% discount to its valuation.

Separately, CIMB Securities noted that while the fine paid by Genting is the second-largest ever imposed by the Nevada state gaming regulator, it remains within the lower end of expectations, ranging from US$7.5 million to US$75 million.

The other terms of the settlement include a commitment to maintaining the enhanced anti-money laundering programme, which will be reviewed and updated annually, with RWLV's independent internal audit team evaluating compliance two years after the settlement’s acceptance.

According to the settlement documents, RWLV investigated allegations regarding certain patrons' sources of funds and potential compliance breaches, reporting its findings to the NGCB and fully cooperating with the inquiry, leading to an overhaul of its leadership team and board of directors.

In a show of confidence, the Lim family has continued to increase its stake in the company. Since March 12, they have acquired an additional 18.5 million Genting shares for RM60.4 million, bringing their total recent purchases to 25.7 million shares, or about 0.7% of total issued shares. Their ownership in Genting has now risen to 44.7%.

The Nevada Gaming Commission is scheduled to review and decide on the settlement on Thursday.

CIMB recommended 'buy' on Genting, with a target price of RM5.25.

This is based on an expected 18% annual growth in core earnings between FY2025 and FY2027, along with a possibility of Resorts World New York City securing a full casino licence by the end of 2025.

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