Theme park to open next year
Genting Malaysia, a unit of Malaysian casino conglomerate Genting Bhd., has doubled its budget for a site-wide renovation of its flagship Resorts World Genting property near Kuala Lumpur, from MYR5 billion to MYR10 billion (US$2.4 billion). Citing Japanese brokerage firm Nomura, GGRAsia reported that investors got a “negative surprise” when they learned about the dramatic cost increase.
“This was also exacerbated by a relative lack of granular detail of this increase,” said Tushar Mohata and Alpa Aggarwal. They said the jump was due to “a 20 percent depreciation in the ringgit versus the U.S. dollar since 2013; an increase in the scope of some of the works; no pre-existing design and intellectual property precedent for the… theme park attractions, which are being built from scratch; and preliminary designs being refined further.”
It’s a hefty price tag, but the Nomura team said the increase in capital expenditure “is not necessarily a negative from a strategic perspective, as Genting is likely to continue to generate strong operating cash flow from the Malaysia operation of MYR2 billion” per year.
A planned theme park at the complex accounts for about a quarter of the total budget, or MYR2 billion to MYR2.5 billion, “not an extraordinary amount” for a development of this scope.
“We think that given Malaysia’s young demographic, and restriction on gaming for a majority of the population, a theme park business means there is something for everyone,” said the Nomura analysts.
