Genting Malaysia (BUY) - GenUK’s NEC A Step Closer To Reality

Genting Malaysia (BUY)

GenUK’s NEC A Step Closer To Reality

• According to several sources in the UK, the latest meeting of the Solihull Metropolitan Borough Council meeting has effectively paved the way for the next planning stage of the project to put a casino at the heart of a destination development at the NEC. The project includes a new conference centre and hotel.
• This news is within ours and management’s time frame and the process is scheduled for completion by 1HFY12. Thereafter, development works will commence in by 2HFY12.
• GenM would not have any problem funding this £120m (RM581m) development given its net cash of RM2.6bn-3.6bn and free cash flow of RM1.8-2.2bn in FY12-13.
• Upon completion of this development, we expect the volatile earnings in GenUK will be mitigated and underpin more consistent revenue growth going forward.
• We remain our forecast and target price of RM4.17. Maintain Buy.

Source: HLIB Research 19 March 2012