Wednesday, July 6, 2011

Genting ...Jul11

Genting group has been aggressively venturing in the US. In 1991, Goh Tong helped fund the development of Foxwoods Resort Casino – a group of five casinos in northeastern Connecticut - for the Mashantucket Pequots, an Indian tribe.

Two decades later, besides Foxwoods the Mashantucket Pequots’ business interests include the Lake of Isles Golf Courses, a joint venture with the MGM Grand at Foxwoods, as well as The Spa at Norwich Inn.

It is not certain whether that tribes with MGM Grand had anything to do with genting’s decision to take up some US$100 million worth of debt paper issued by casino operator MGM Mirage Inc in 2010. The debt paper subscription gave rise to speculation that MGM could be an option for Genting’s entry into Macau and Las Vegas.

The Lim family is also said to be behind another Indian tribe, the Mashpee Wampanoag, who are lobbying to secure expanded gaming rights in Massachusetts, US. US House Speaker has been quoted as saying that he hoped a bill to allow three resort style casinos and two racetrack gambling facilities in Massachusetts would pass in July 2011.

This is happening even as Genting is ready the Resorts World of New York racino for opening by Oct 1, 2011.

Genting also has an ongoing lobby alongside Sheldon Adelson’s Las Vegas Sands Corp to change Florida’s gaming laws, which currently only allow gaming on Seminote tribal land. The group planned to add a casino to the planned US3 billion Resorts World of Miami.

The push by casino lobbyists in a number of US states coincides with the need to create jobs and boost incomes for US.

But even if full scale commercial casino gaming were to increase in parts of US, would Genting be a net beneficiary? How would these ventures affect Genting’s future?

The group is flush with cash from its operations in Singapore and Malaysia. Genting Malaysia, which still has rm1.3 billion cash after the Miami land purchase, is generating rm1.7 billion in operations cash flow a year. This does not include the millions generated by Genting Singapore’s Plc Resorts World Sentossa, which is slated to complete Phase 2 of its development by end 2011.

All the cash provides the group with a strong base to explore growth opportunities.

Despite the small incremental contribution by the group’s various overseas ventures, the longer term cumulative contributions could be relatively significant when all its various overseas ventures come on stream over the next one to two years.

Genting wholly owned subsidiary Genting UK plc was reportedly granted a license for a large casino in Birmingham. The overseas ventures are in addition to the 46 small casinos owned by Genting in the UK.

Expect the award of a 'large casino' licence to Genting Malaysia Bhd's unit, Genting UK plc, will increase the group's earning by 2.3 per cent upon its completion in 2013. The new casino was expected to raise the capacity of table and slot machines in Genting's UK casino operations by roughly 13 per cent and at group level, 5.3 per cent. This is given that a single large casino in UK has a capacity for roughly 40 to 50 gaming tables and 150 slot machines compared with 600 to 800 gaming tables and 1,600 slot machines that a new large-scale integrated resort in Asia possess.

However, Resort World Miami might not be entirely viable without a casino.

Genting also sponsorship of Aston Villa football club’s T-Shirt.

Many of its rival gaming giants have come to Asia in search of new growth opportunities.

It should also be noted that in Dec 2010, Genting was reportedly looking at a US$4 billion casino project in Vietnam. T

There is also a bigger question mark. With many distressed assets available for sale in Las Vegas Strip, is it a just matter of time before Genting attempts to purchase a footprint there?

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