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US$924m upgrade a much-needed boost for M'sian theme park group
Publication Date : 31-07-2013
While Genting Malaysia Bhd’s (GenM) 400 million ringgit (US$123 million) theme park collaboration with US-based 20th Century Fox has been lauded, not much has been revealed about the potential new gaming capacity at its hilltop resort – the group’s real money-spinner.
CIMB Research is so far the only outfit to have assumed an increase of 100 tables for Resorts World Genting (RWG), GenM’s flagship integrated resort in Pahang.
Details on more table games and electronic slots were unavailable, given the religious sensitivities in Malaysia, analysts said. It is understood that applications for additional gaming capacity must be made directly to the finance ministry.
GenM announced last Friday a much-anticipated plan to rejuvenate RWG at a cost of 3 billion ringgit ($924 million) over five years, starting with an overhaul of its aged outdoor theme park, which will be closed from September this year till 2016 for extensive renovations.
The 20th Century Fox-led park, the first of its kind in Asia, will reopen in three years with 25 rides featuring movies like Ice Age, Rio, Alien & Predator and Night at the Museum, a move analysts expect to boost mass market volumes and average spends per visitor.
GenM has seen little growth in earnings from RWG since its last expansion of table games in 2010, when the resort added 100 tables to the current 500 and 500 slots to 3,500 due to its stretched capacity and stagnating visitor numbers.
“The upgrade and expansion is a much-needed shot-in-the arm for RWG. Its non-gaming assets and attractions were getting tired and it needed to widen its appeal to a younger and more discerning market in the Klang Valley.
“The 3 billion ringgit capital expenditure (capex) plan also supports our key assumption of 100 new tables in 2015 when the 1,300-room hotel is completed. Based on regional comparisons of rooms per table and capex per table ratios, our assumption of 100 new tables looks conservative,” CIMB Research said in a report on Tuesday.
The brokerage noted that GenM could even increase its table games by 300, because of RWG’s room-to-table ratio of 20 hotel rooms for every table, versus a ratio of three to five hotel rooms per table in other countries.
“We believe that RWG is out of sync because it is the first integrated resort in Asia and has a very ad-hoc and non-transparent regulatory environment, that is, RWG would apply for more tables and slots on a discretionary basis after engaging with the finance ministry.”
CIMB Research had said in a previous report that even with more tables, RWG would still lag other similar casinos in the region by 2015. Manila, it said, was set to have 1,000 tables by that time.
RWG gets 85-90 percent of its revenue from gaming, with the rest from its leisure segment.