KUALA LUMPUR (Aug 18): Kenanga Research has removed a 20% discount it previously applied to Genting Malaysia Bhd's (KL:GENM) valuation, citing improved deal-related discipline and governance.

The research house upgraded its target price to RM2.00, noting that the sale of subsidiary Empire Resorts’ non-gaming assets and the group’s sharpened focus on the upcoming New York casino licence bid mark positive strategic shifts.

On Friday (Aug 15), Genting Malaysia said Empire Resorts will sell key non-casino properties — like the Resorts World Catskills hotel, Alder Hotel, golf course, event centre, and restaurants — to a local development group. Empire Resorts will use the money to buy the land these assets sit on and fully repay its bonds.

The restructuring is seen as timely, as Genting Malaysia needs US$5 billion (RM21.12 billion) to upgrade Resorts World New York City (RWNYC) into one of the largest casinos in the US and New York State’s biggest hotel complex. With RM10 billion in net debt and an 84% gearing ratio, the group has limited headroom to borrow — estimated at only RM2 billion (US$500 million).

While the RWNYC project could support an additional US$1.5–2 billion in debt, Kenanga highlighted a US$2–3 billion funding gap remains, reinforcing the importance of selling non-core assets.

It said it is too soon to include value for the New York licence, though, because funding gaps and risks remain, and the final decision won’t be made until year-end with new competition expected.

The deal will also help Empire Resorts reduce costs.

Following the redemption of a US$300 million bond, Hong Leong Investment Bank (HLIB) estimates Empire Resorts will save US$22.5 million annually in interest — equivalent to 38% of its 2024 projected loss of RM252 million. Buying the land and leasing it back to Sullivan County Resort Facilities Local Development Corporation is expected to save lease costs and improve cash flow.

CIMB Securities raised its target price for Genting Malaysia by 10% to RM2.15, citing Empire Resorts’ debt reduction. However, it continues to assign zero equity value to Empire Resorts, pointing to weak gaming prospects and uncertainties around the 1,554.6 acres of land recently acquired by Empire Resorts.

If Empire Resorts reaches breakeven, CIMB projects Genting Malaysia’s earnings per share (EPS) could rise 51–55% in FY2026–27.

HLIB, however, remains cautious and is among 12 analysts who have a "hold" call on the stock. It has a target price of RM1.82 which it attributed to the deal still being at an early stage and the company’s recent underperformance in terms of earnings.

It said the target price could be raised to RM2.00 if the proposals are fully implemented by end-FY2025.

18 out of 19 analysts have an RM2.01 a share target price for the stock, which at noon break, closed up 1.98% to RM2.06 a share. This values the company at RM11.68 billion. The stock is down 8.8% this year.