Genting Malaysia

Re: Genting Malaysia

Postby winston » Wed Aug 07, 2019 10:01 am

vested

GENM’s surprise binding agreement to buy a 46% stake in loss-making US gaming operator Empire Resorts from the controlling shareholder for US$128.6m has stoked up fears of a value-destructive acquisition.

The cumulative price tag is calculated to rise to almost US$150m if its planned joint privatisation bid with Kien Huat goes through.

Maintain MAKRET WEIGHT on the gaming sector.

Downgrade GENM to SELL with target price of RM3.16, and GENT to HOLD with target price of RM7.48.

Source: UOBKH

https://research.uobkayhian.com/content ... b42780c0fa
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Re: Genting Malaysia

Postby winston » Wed Aug 07, 2019 3:26 pm

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Genting Malaysia loses RM3.15b market cap on earnings erosion risks

by Justin Lim

KUALA LUMPUR (Aug 7): Genting Malaysia Bhd (GenM) saw as much as RM3.15 billion in market capitalisation wiped off as its share price tumbled as low as 14.68% or 53 sen to RM3.08 at the early morning trade, after the firm acquired 46% of the common stock in Nasdaq-listed gaming and entertainment company Empire Resorts Inc from Tan Sri Lim Kok Thay, via Kien Huat Realty III Ltd.

At 11am, GenM's share price pared some of its losses to trade at RM3.22, which is 39 sen or 10.8% lower than yesterday's closing price of RM3.61, making it the top loser across Bursa Malaysia this morning. The share price also valued it at a market capitalisation of some RM21.44 billion.

GenM's trading volume also surged to some 176.86 million shares, making it the most actively traded counter this morning.

GenM, in a stock exchange filing yesterday, said it has inked a binding term sheet with Kien Huat for its wholly-owned Genting (USA) Ltd to undertake the acquisition, which GenM said will be funded by internal funds.

Empire owns and operates Resorts World Catskills (RWC), a casino resort situated on a 1,700-acre site in New York.

As at March 31, 2019, GenM's cash and cash equivalents stood at RM7.92 billion, while its debts stood at RM9.68 billion.

Meanwhile, Hong Leong Investment Bank (HLIB) today downgraded GenM to hold (from buy previously), with a lower target price of RM3.79 (from RM4.21 previously), to reflect the risk of short-term earnings erosion in relation to the acquisition of loss-making New York-based firm from Lim.

HLIB said it views the acquisition as negative and the acquisition price implies a premium to book value despite Empire Resorts Inc still recording losses.

HLIB noted that Empire Resorts had registered losses of US$25 million to US$46 million in the preceding three years.

"FY18, Empire recorded a loss of US$138 million which was largely attributed to the high start-up expenses incurred for the commencement of Resorts World Catskills (RWC) (1Q19 net loss widened by 43% year-on-year to US$37.6million).

"Assuming Empire's FY20 registers a loss similar to that of FY18, we note that the impact to GenM's bottomline will be approximately -RM283 million (circa 23% of our FY20 earnings forecast)," the research house added.

However, HLIB has maintained its forecast for GenM pending more clarity on Empire Resorts' earnings outlook, which at the moment is currently loss-making.

Source: The Edge

https://www.theedgemarkets.com/article/ ... sion-risks
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Re: Genting Malaysia

Postby winston » Thu Aug 08, 2019 6:56 am

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RHB Research is neutral on the Empire proposal and believed that the total acquisition price of US$180mil (RM754mil) for GenM to own 49% of ER via the proposed JV was insignificant, at c.3.5% and 4.3% of GenM’s market cap and net assets.

“While the acquisitions are not value accretive (at 1.9x P/BVvs GENM’s current P/BVof 1.2x) and may negatively affect our earnings forecasts, the acquisition price appears to be fair compared to the potential GGR of over USS$200mil and US$1bil cost to construct RWC,” it said.

The research house added that undertaking a similar greenfield expansion of such a scale (along with a licence) would likely cost more, based on its estimates.

RHB has reiterated its “buy” call on GenM with an unchanged SOP-derived target price of RM4.40, 22% upside plus 4.4% FY19F yield.

Source: The Star

https://www.thestar.com.my/business/201 ... HfzStvw.99
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Re: Genting Malaysia

Postby winston » Thu Aug 08, 2019 9:59 pm

What’s New

Acquiring loss-making Empire Resorts for USD128.6m in a related party transaction

Empire reported FY18 net loss of USD138.7m

If Empire losses persist, FY20-21 earnings forecasts could be diluted by >20%

Downgrade to FULLY VALUED with lower TP of RM3.15

Source: DBS

https://researchwise.dbsvresearch.com/R ... =ehbbakiia
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Re: Genting Malaysia

Postby winston » Thu Aug 08, 2019 10:06 pm

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A related party transaction but with a twist this time

Maintain earnings estimates but downgrade to HOLD

GENM will privatise the currently loss making Empire Resorts with Kien Huat Realty, which is controlled by the Lim family.

Pending more details, we maintain our earnings estimates and MYR3.80 TP.

But with <10% upside, we downgrade GENM to HOLD from BUY.

In our view, Empire Resorts’ current fundamentals are wanting but with Kien Huat Realty
owning the larger 51% of the JV that will own Empire Resorts, we gather the Lim family may be more sanguine on its outlook.

Source: Kim Eng

https://factsetpdf.maybank-ke.com/PDF/1 ... e987d1.pdf
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Re: Genting Malaysia

Postby winston » Thu Aug 08, 2019 10:06 pm

vested

A related party transaction but with a twist this time

Maintain earnings estimates but downgrade to HOLD

GENM will privatise the currently loss making Empire Resorts with Kien Huat Realty, which is controlled by the Lim family.

Pending more details, we maintain our earnings estimates and MYR3.80 TP.

But with <10% upside, we downgrade GENM to HOLD from BUY.

In our view, Empire Resorts’ current fundamentals are wanting but with Kien Huat Realty
owning the larger 51% of the JV that will own Empire Resorts, we gather the Lim family may be more sanguine on its outlook.

Source: Kim Eng

https://factsetpdf.maybank-ke.com/PDF/1 ... e987d1.pdf
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Re: Genting Malaysia

Postby winston » Fri Aug 09, 2019 9:10 am

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Technical Tracker - HLIB Retail Research
Trading Buy: GENM - 4715
Limited downside risk amid undemanding valuations
(Last price: RM3.23, Potential upside +13.0%)

Company Profile
Genting Malaysia offers gaming, leisure and hospitality services in Malaysia, UK and US.


Trading Catalyst

After hitting YTD high of RM4.00 (26 July) following the GENM-Walt Disney/21st Century Fox lawsuit resolution, the stock plunged to a low of RM3.08 after a surprise related-party transaction.

GENM’s downside may be limited on the back of undemanding valuation at 1.02x P/B (32% below 10Y average of 1.5x) and 15.5x FY20 P/E (8.3% below 10Y average of 16.9x).

Technically, GENM is poised for potential downtrend reversal following the spinning top pattern, with upside targets at RM3.35-3.65 in the mid to long term, supported by the dispute resolution with Fox and clearer direction of the outdoor theme park.

Technical View
Resistance: RM3.35 / RM3.54 / RM3.65
Support: RM3.08 / RM3.00
Cut loss: RM2.98

Key Financial Stats
Trading at 15.5x FY20E (8.3% below its 10Y mean of 16.9x) and 1.02x P/B (32% below 10Y average 1.5x)

Source: Bloomberg, HLIB
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Re: Genting Malaysia

Postby winston » Tue Aug 13, 2019 7:28 am

vested in Genting Msia and Genting Berhad

Sullivan casino’s parent company considers bankruptcy

By Daniel Axelrod

THOMPSON – Empire Resorts, parent company of Resorts World Catskills casino, recorded a second-quarter 2019 loss of $35.96 million on revenue of $60.07 million and operating expenses of $79.94 million, according to a Friday financial filing.

The company, which owns the Town of Thompson casino and the Monticello Raceway horse track, cautioned that it’s considering a voluntary, prepackaged Chapter 11 bankruptcy, according to a Friday Securities and Exchange Commission filing.

The warning follows six of months of 2019 losses totaling $73.5 million. From the casino’s Feb. 8, 2018 opening through the end of last June, Empire has reported $211.5 million in losses, an average of roughly $12.4 million per month.

The losses are due to gross gaming revenues that lagged 45 percent below company projections in year-one alone, in a Northeast market over-saturated with gambling options.

Plus, the company is over-leveraged. It paid $35.86 million in interest, through the first six months of 2019, on the $487.5 million debt load it took on to build the $928 million casino.

If the company seeks a prepackaged bankruptcy, it would be to smooth and accelerate a Chapter 11 filing. Empire and its creditors would try to agree on a financial reorganization plan before the company submitted it for court approval.

A prepackaged bankruptcy would be Empire’s only option to avoid breaching its debt covenants if it pursues Chapter 11 protection, the company stated in its Friday filing.

If the company can’t restructure its debt and other obligations, “we may not have enough cash and working capital to fund the operations,” the company warned. “As a result, we may be required to seek to implement an in-court proceeding under Chapter 11 of the United States Bankruptcy Code” to cover expenses for the casino, its hotels and future golf course.

On July 25, Malaysian-Chinese casino magnate K.T. Lim, whose family trust Kien Huat Realty owns 86 percent of Empire, said he wants to buy the company’s outstanding shares to save it.

Such an acquisition by Kien Huat would make bankruptcy, and any accompanying debt reduction, easier because Empire’s debt holders would be negotiating with just a Lim-controlled business entity.

On Monday, Lim revealed that he wants to take control of Empire by teaming with his other casino company, Genting Malaysia, to form a holding company that would buy up Empire’s stock for $9.74 per share.

Via Kien Huat, Lim’s family is the largest shareholder in Genting Malaysia, a giant, publicly traded, transnational casino and entertainment company. Lim also serves as Genting Malaysia’s chairman and CEO.

Genting Malaysia agreed on Monday to spend $128.6 million to buy 46 percent of the Lim family’s Empire stake or 35 percent of Empire’s voting power on a fully diluted basis after the conversion of all preferred stock into common stock.

Pending the sale’s closure, a new Genting Malaysia-Kien Huat holding company will make its buyout offer to Empire’s remaining shareholders.

In a July 25 statement, Stefan Friedman, a spokesman for Genting and Lim, reaffirmed Lim’s “strong commitment” to the casino, adding that “Mr. Lim believes in the long-term potential of Resorts Word Casino Catskills.”

Besides Empire struggling with debt and heavy gaming competition, gaming experts have traced the casino’s problems to its location.

State leaders pitched the 2013 effort to authorize four non-Indian casinos as a way to bring jobs and investment to economically disadvantaged upstate areas. And the casino has been successful in that regard, employing 1,756 full-time and 100 part-time employees as of the end of 2018.

But if state leaders prioritized economic viability, they would have allowed one or two casinos closer to New York City, not four casinos in cash-strapped, customer-short upstate areas with limited demand and spending power, gaming experts have told the Times Herald-Record.

One way Lim hopes to turnaround Empire’s fortunes is by bringing more electronic gaming nearer to the city. Genting’s electronic slots at Aqueduct Racetrack in Queens have been wildly successful in recent years.

And Empire plans to seek state gaming commission approval to place a digital gaming parlor in Orange County, with the former Nepera Chemical complex in the Village of Harriman under consideration as a site.

Before NFL season begins, Resorts World Catskills also intends to introduce sports betting, though state law will only permit bets to be placed at the casino in Thompson. And the first nine holes of the casino’s revamped Monster golf course will soon be complete.

Of late, another bright spot for the casino has been a rise in gross gaming revenues for slot machines, which surpassed $11 million per month, respectively, in May, June and July, according to the state Gaming Commission. That’s up from as low as about $6 million per month in the past.

The casino’s daily per machine winnings averaged a healthy $236 last month, after Resorts World Catskills shed machines, dropping to 1,600 in May from 2,157 when it opened. A new poker area recently replaced the empty space.

Gross gaming revenues for table games have been even healthier in recent months, averaging a robust $1,932.02 per table per day in July for 151 tables.

Source: Record Online

https://www.recordonline.com/news/20190 ... bankruptcy
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Re: Genting Malaysia

Postby winston » Tue Aug 13, 2019 11:40 am

Empire Resorts on the brink of filing for bankruptcy

by Kathy Fong

To recap, news of GenM buying the 46% stake in loss-making Empire from Kien Huat, Lim’s investment vehicle, had sparked fierce selling of its shares as well as those of its parent, Genting Bhd.

Some RM2.6 billion was wiped from GenM’s market capitalisation last Wednesday, and Genting saw RM1.8 billion evaporated following news of the related party transaction.

Judging by Empire’s latest announcement, it is likely its shareholders, including GenM, will have to inject more capital to sustain Resorts World Catskills’ operations moving forward.


Source: The Edge Financial Daily

https://www.theedgemarkets.com/article/ ... bankruptcy
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Re: Genting Malaysia

Postby winston » Wed Aug 14, 2019 12:10 pm

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Empire in a challenging state

Empire considering filing for voluntary bankruptcy to restructure its financial obligations

Further capital injection may be needed

If Empire’s losses are sustained, GENM’s FY20-21F earnings could be diluted by >20%

Maintain FULLY VALUED; more downside risks to our earnings estimates and RM3.15 TP.

Source: DBS

https://researchwise.dbsvresearch.com/R ... =ehccjkiia
It's all about "how much you made when you were right" & "how little you lost when you were wrong"
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