Genting HK

Genting HK: last wk, Melco Crown announced that it is acquiring a 93% stake in a Philippines-listed co, called Manchester Int’l Holdings (MIH) for a net purchase cost of US$5m (PHP 200m). Upon completion, Melco will use this vehicle to manage its Philippines business, including its 50% JV with Belle Corp (BEL PM). Melco intends to invest US$600m in the Belle Grande project. Mgt targets opening both Phases 1 & 2 together in 1H14. Deutsche estimates the project to have about 300 tables, 1200 slots and 800 hotel rooms. Meanwhile, Bloomberry Resorts is scheduled to open its first casino called Solaire in 1Q13, which should have 295 gaming tables, 1200 slot machines and 500 hotel rooms. We see interest in the Philippines gaming scene starting to gain traction, as the first of the four integrated resorts that are part of the Entertainment City project comes close to completion. This bodes positively for Genting HK, which owns a 50% stake in Travellers International, that in turn operates the Resorts World Manila Integrated Resort. RWM currently enjoys first mover advantage as the monopoly integrated resort in the Philippines, with daily visitors pegged at btwn 18,000 and 20,000. To take on the impending competition, Travelers has invested another US$1.1b to put up Resorts World Bayshore (also part of the Entertainment City project), to be operational by 2016. CIMB previously noted that RWM is a key driver to GENHK’s performance in FY13, given the strong underlying growth in turnover flowing through to the bottomline. The house has an Outperform rating with TP US$0.48.