KUALA LUMPUR: Genting Malaysia Bhd’s stock fell close to 5% yesterday after news that the Florida legislature had postponed a vote on a bill to expand casino gambling in the state. However, analysts are still bullish on the company’s prospects.
Genting Malaysia fell 4.99% or 20 sen to RM3.81 on a volume of 24.04 million shares, while its parent, Genting Bhd, lost 4.55% or 50 sen to close at RM10.50 with 12.48 million shares traded yesterday.
The postponement of the vote by a Florida’s House of Representatives committee has stalled Genting Malaysia’s plan to build a US$3.8 billion (RM11.4 billion) 5,200-room casino resort overlooking Miami’s Biscayne Bay.
But RHB Research and CIMB Research are still maintaining their “outperform” recommendations on the stock, with target prices of RM4.20 and RM4.80 respectively.
Both RHB Research and CIMB Research said yesterday that the postponement of the vote does not mean that casino gaming in Florida is completely ruled out.
RHB Research added that there are still other avenues for the company to explore in order to get the project approved by lawmakers.
The local research house stated that it does not expect any financial impact from the postponement of the bill as Genting Malaysia’s management had told the research firm that the US$3.8 billion for the casino resort will not be spent unless the casino law is approved.
CIMB Investment, in a report yesterday, said that even if the bill does not go through, the buildings or landbank could still be used for non-gaming purposes since tourism is a huge business in Florida. If this were the case, the project’s development period should be considerably longer at around 10 to 15 years, it added.
Genting Malaysia has already bought nearly US$450 million worth of property for its project in Florida.
RHB Research said there is little chance that lawmakers will approve the sensitive bill this year, being an election year, while CIMB Research said it expects a retooled casino bill to make a comeback in the 2013 legislative sessions.
RHB Research said, according to state records, the Genting group contributed US$629,529 in the final seven months of 2011 to Florida lawmakers, parties and political committees, including US$385,000 to the state Republican Party, which controls the Legislature and the governor’s office.
This article appeared in The Edge Financial Daily, February 9, 2012.
Genting Malaysia fell 4.99% or 20 sen to RM3.81 on a volume of 24.04 million shares, while its parent, Genting Bhd, lost 4.55% or 50 sen to close at RM10.50 with 12.48 million shares traded yesterday.
The postponement of the vote by a Florida’s House of Representatives committee has stalled Genting Malaysia’s plan to build a US$3.8 billion (RM11.4 billion) 5,200-room casino resort overlooking Miami’s Biscayne Bay.
But RHB Research and CIMB Research are still maintaining their “outperform” recommendations on the stock, with target prices of RM4.20 and RM4.80 respectively.
Both RHB Research and CIMB Research said yesterday that the postponement of the vote does not mean that casino gaming in Florida is completely ruled out.
RHB Research added that there are still other avenues for the company to explore in order to get the project approved by lawmakers.
The local research house stated that it does not expect any financial impact from the postponement of the bill as Genting Malaysia’s management had told the research firm that the US$3.8 billion for the casino resort will not be spent unless the casino law is approved.
CIMB Investment, in a report yesterday, said that even if the bill does not go through, the buildings or landbank could still be used for non-gaming purposes since tourism is a huge business in Florida. If this were the case, the project’s development period should be considerably longer at around 10 to 15 years, it added.
Genting Malaysia has already bought nearly US$450 million worth of property for its project in Florida.
RHB Research said there is little chance that lawmakers will approve the sensitive bill this year, being an election year, while CIMB Research said it expects a retooled casino bill to make a comeback in the 2013 legislative sessions.
RHB Research said, according to state records, the Genting group contributed US$629,529 in the final seven months of 2011 to Florida lawmakers, parties and political committees, including US$385,000 to the state Republican Party, which controls the Legislature and the governor’s office.
This article appeared in The Edge Financial Daily, February 9, 2012.
