GENM stands a good chance of winning a commercial casino license in Upstate New York, in our view.
We estimate that every 5% share of the addressable market will accrete 26% to our FY16 EBITDA, +16% to our TP.
If GENM wins, total upside surges from 12% to 26%. Maintain BUY on unchanged MYR4.70 SOP-based TP (for now).
According to our detailed calculations, every 5% share of the addressable market will accrete 26% to our FY16 group EBITDA estimate and 16% to our TP while the cannibalization impact on Resorts World New York City will be minor at 2% to our FY16 group EBITDA estimate and 1% to our TP.
We leave our estimates and SOP-based TP of MYR4.70 unchanged until the results of the bid are announced. Should GENM win a license, total upside surges from 12% to 26%. We were already BUYers of GENM due to the MYR4b Genting Integrated Tourism Plan and now have another reason to remain so. Reiterate BUY.
Source: Maybank Research - 9 Jul 2014
We estimate that every 5% share of the addressable market will accrete 26% to our FY16 EBITDA, +16% to our TP.
If GENM wins, total upside surges from 12% to 26%. Maintain BUY on unchanged MYR4.70 SOP-based TP (for now).
What’s New
GENM submitted two applications for commercial casino licenses in Upstate New York on 30 Jun 2014. Both are located in Orange County, the county closest to New York City. GENM will next make oral presentations on its applications to the New York Gaming Facility Location Board on or after 21 Jul 2014. Winners will be selected by early autumn (late 3Q14 or early 4Q14).What’s Our View
We opine that GENM stands a good chance of winning a license due to its strong balance sheet, global loyalty programme and global gaming experience that is unmatched by any of the competing applicants. The addressable market for an Upstate New York commercial casino is humongous at USD12.6b p.a..According to our detailed calculations, every 5% share of the addressable market will accrete 26% to our FY16 group EBITDA estimate and 16% to our TP while the cannibalization impact on Resorts World New York City will be minor at 2% to our FY16 group EBITDA estimate and 1% to our TP.
We leave our estimates and SOP-based TP of MYR4.70 unchanged until the results of the bid are announced. Should GENM win a license, total upside surges from 12% to 26%. We were already BUYers of GENM due to the MYR4b Genting Integrated Tourism Plan and now have another reason to remain so. Reiterate BUY.
Source: Maybank Research - 9 Jul 2014
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