Pinpoint View – Genting’s Hope

Posted: June 7, 2009 in Uncategorized

Lion City’s Chinese Newspaper Highlights Genting Hope… Genting's Hope

(Dated June 7, 2009)

The Lion City’s Chinese newspaper has highlighted about the hope of Genting group’s recent sales of 9% of its Genting Singapore stakes to an undisclosed buyer. The press speculates that Genting group might be switching its interest onto Macau again… with newly acquired capital funding to support a potential buyout of MGM’s stakes in Macau (MGM Grand Macau, a joint venture with Pansy Ho).

 

Expert IRExpert IR’s Pinpoint View:

June 7, 2009

Reader may refer to my earlier article “Any Chance for Genting?” posted on May 27, 2009.

To reiterate, I would just make my points concise,

(1)          First thing first, acquisition of a major gaming stake in Macau (such MGM) would require the consent of Macau and central government. It is not a simple business acquisition per se.

(2)          Next issue, I would say that should MGM really hit the rock and needs to sell its joint venture stakes with Pansy Ho, it is likely that a recommended list of suitors which includes Taiwanese entities will be discussed behind the scene.

(3)          If the above scenarios happen, then it is best to understand how Genting group’s relation with the Chinese authority…

(4)          Therefore, whether the Lion City will be triggered by such a move (into Macau and JV with Stanley Ho’s daughter) to be made by the Lims is not even in the lineup. The whole speculation remains a one-sided love affair.

(5)          The Lim family which owns the Malaysian gaming firm Genting has stunned the market by selling its entire stake in the Singapore unit for S$615 million (RM1.5 billion) as reported by investment analysts. This is typically a reduction of risk exposure (in the Lion City’s IR) by the family.

(6)          Regardless of the current economic turmoil, the ability to establish a firm ground and strategic investment in Macau’s gaming industry is far better than the Philippines + Lion City’s IR combined.  As for Genting’s UK casino investment, it remains a long shot still.

So, Genting has to play a bad hand well this time… but who knows?

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