Genting Malaysia, a prominent player in the casino industry, could see a significant boost in its long-term earnings following recent developments in the United States, according to Maybank Investment Bank. The financial institution estimated long-term earnings could climb as much as 74 percent.
The main reason for that is two potential casino projects in the United States. One is in New York and another in Massachusetts. Both were thought to be off the table, but have resurfaced, creating opportunities for Genting Malaysia to expand its operations and increase its profits.
The New York State Gaming Commission has recently reopened the Request for Applications (RFA) process for three downstate commercial casino licenses. Among the frontrunners for one of these licenses is Genting Malaysia, which aims to expand its existing Resorts World New York City (RWNYC) property by adding table games. Should this expansion occur, Maybank Investment Bank’s Samuel Yin Shao Yang estimates that the core net profit from RWNYC could climb up to $130 million.
In a surprising turn of events in Massachusetts, the Mashpee Wampanoag tribe has formally requested a meeting with the Taunton City Council to discuss the potential revival of its First Light Resort & Casino development in Massachusetts. Genting Malaysia had previously invested in this project by subscribing to interest-bearing promissory notes issued by the Mashpee Wampanoag Tribe.
If the casino project moves forward, Genting Malaysia’s core net profit estimates could be boosted by approximately $38.5 million annually.
Genting Malaysia’s involvement in the Mashpee Wampanoag Tribe’s casino project took a setback in 2018 when the U.S. Department of Interior ruled against the tribe’s development plans, leading to Genting Malaysia writing off its investment as an impairment loss. However, if the promissory notes are reinstated, Maybank Investment Bank predicts a significant positive impact on Genting Malaysia’s core net profit estimates.
Taking into consideration both the potential expansion at RWNYC and the revival of the First Light Resort & Casino, Maybank estimates that Genting Malaysia’s long-term earnings could increase by as much as 74 percent. This would result in a 31 percent increase in the discounted cash flow target price, raising it to more than a dollar. The “blue sky” scenario, as referred to by Yang. implies an attractive upside potential of 40 percent. He continues his recommendation of “buy” for Genting stock.
