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KUALA LUMPUR (Nov 30): Investors in Genting Malaysia Bhd will “likely feel relieved” after the company failed to win a provisional 10-year casino concession in Macau
Citing a note issued by Nomura analysts on Monday (Nov 28), gaming industry magazine Inside Asian Gaming (IAG) on Tuesday (Nov 29) said following the weekend announcement by Macau’s tender committee that the six current concessionaires would all be issued new 10-year concessions from Jan 1 – with Genting Malaysia subsidiary GMM the only unsuccessful bidder – Nomura’s Tushar Mohata and Alpa Aggarwal suggested investors might not feel as disappointed as company management at missing out on a concession.
“There were two concerns if Genting Malaysia had won the bid,” they wrote, “the risk of a low ROIC investment in Macau given lack of clarity on the residual size of the Macau gaming industry once China emerges from zero-COVID Strategy, after years of crackdown on the sector by Beijing; and funding risk for a large capex commitment and resulting balance sheet pressure on Genting Malaysia and [Genting Berhad] to develop a new Macau resort, and resulting negative FCF in the coming years.”
Despite Genting missing out, Mohata and Aggarwal said most analysts and investors had never factored a potential win into their estimates, with investor focus now able to fully return to the expected recovery in visitation and earnings at the company’s operating resorts.
Nomura has maintained a “Buy” rating for Genting Malaysia and “Neutral” rating for parent Genting Bhd.
IAG added that while Nomura said it was not a total surprise that Genting Malaysia missed out on a Macau concession, JP Morgan analysts stated over the weekend that the company could still pursue a Macau interest by way of either equity investment or a joint venture partnership, pending Macau government approval.
Read Also: https://www.theedgemarkets.com/article/genting-malaysia-confirms-unsucce…
https://www.theedgemarkets.com/article/genting-malaysia-unlikely-abandon…
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