As I just found out, Resorts World New York City is 100% owned by Genting Malaysia, as opposed to my earlier calculations that showed an effective 76.4% stake by Genm via Empire Resorts.

RWNYC is the prime asset under Genm. As shown in calculations above, the 64 acres of land owned by RWNYC may potentially be worth US$6.1 billion or RM27.4 billion. This is equivalent to RM4.62 per share of Genm.

Should Genm win a full casino license in New York, then this RWNYC would be worth another US$4.0 billion more.

Resorts World Catskills is located near Monticello which is about 80km away from Manhattan (as measured from google map). RW Catskills sit on a large tract of land measuring over 1,700 acres, but land value there is a lot lower than that in New York City, with market value of US$2.00 - 4.00 psf. So the 1700-acre land owned by Empire Resorts there is probably worth some US$200 million. Empire Resorts has invested over US$900 million in this RWC, so RWC is probably worth about US$1.1 billion - $1.2 billion based on land + construction costs.

Earnings wise, Empire Resorts has just turned around with positive EBITDA since 2020. Maybank Research in its earlier reports forecast a positive EBITDA of about US$14m - $18m in FY2021-2023 without online sports betting and EBITDA of US$15m - $44m in FY2021-2023 with online sports betting. I am not sure how Empire Resorts has been doing with the online sports betting but earnings in last few quarters do not show big improvements.

@twynstar, I think you are right, Empire Resorts only owns RW Catskills and RW Hudson Valley. Resorts World New York City is wholly owned by Genting Malaysia.

I did further research after I posted the comments above yesterday and was about to correct my own mistakes. Thanks for pointing it out.

If we look at the valuation of Empire Resorts from the real estate angle, a US$1.0 billion valuation seems extremely cheap.

Empire Resorts owns three sites in New York :
1) Resorts World New York City (RWNYC)
2) Resorts World Catskills (RWC)
3) Resorts World Hudson Valley (RWHV)

RWNYC is located at Queens which adjacent to the prestige Brooklyn county and about 8km away from Manhattan financial district. RWNYC is the largest among the 3 sites, measuring a land size of 64 acres with over 1.0 million square feet of gaming floor and few hundred hotel rooms.

Genm is disposing of its 15.5-acre Miami land for US$1.225 billion cash, valuing the vacant land at US$1,814 per square foot (psf). Online checks show that commercial land was transacted at an average value of US$2,590 psf for all land deals above US$6 million in Queens from April 2022 to March 2023. Commercial land was transacted at a much higher average of US$15,632 psf for all land deals above US$50 million in Manhattan from April 2022 to March 2023, based on data from the Department of Finance, New York City.

If we take the average of the Miami land valuation ($1,814 psf) and the average commercial land value ($2,590 psf) in Queens, we get a potential value of US$2,204 psf which will value RWNYC's 64-acre land in Queens at US$2,204 psf x 64 acres x 43,560 sf = US$6.1 billion.

Added with the 1.0-million-square-feet gaming floor and hotels worth some US$1.0 billion, then RWNYC itself may be worth US$7.0 billion.

Even if we take a 50% discount for the large piece of land, RWNYC should be worth US$4.0 billion easily.

RWC and RWHV are smaller and may be worth some US$1.5 billion combined, so Empire Resorts should be worth at least US$5.5 billion from real estate angle.

Hence, I would say the current valuation of US$1.0 billion for Empire Resorts is extremely cheap.

Many were skeptical of Genm's deal with Kien Huat in acquiring stakes in Empire Resorts US. Let's look at the background and some numbers again before we conclude that it is a good or bad deal.

Genm first in Nov 2019 acquired a 49% stake in Empire Resorts at US$159.7 million, valueing Empire Resorts at US$326 million. Genm injected additional equity of US$173m in 2020 and equity of US$187m in 2021, which raised GENM's stakes in Empire Resorts to 66.6%. The two additional equity injections effectively increased equity value of Empire Resorts to (159.7m +173m + 187m)/66.6% = US$780 million.

In the latest move, Genm raised its stakeholding in Empire Resorts by 10% at US$100m, valuing Empire Resorts at US$1.0 billion, and Genm's stakes in Empire Resorts will rise to 76.3%.

Empire Resorts registered total revenue of US$369 million and EBITDA of US$106.1 million in FY2022. To note that Q4FY2022 was strong (after covid) with revenue of US$102 million and EBITDA of US$33 million, locking in an EBITDA margin of 32.3% higher than that of Malaysia (29.4%) and UK (18.0%) gaming business.

Annualising the latest quarterly result will give a projected EBITDA of US$132 million for 2023. So a valuation of US$1.0 billion puts the EV/EBITDA at 1,000/132 = 7.6x.

This is lower than the valuation of Genting Singapore at EV/EBITDA of 8.0x and valuation of Macau casinos at EV/EBITDA of over 20x.

@tonywong8, you are right to point out the higher power consumption in Singapore will likely push up USEP. The peak demand went up to 7,300MW again, not too far away from the previous peak of 7,560MW in July 2021. I expect the peak demand will scale new highs in coming months as economy picks up speed amidst super hot weather.
This is significant as such peak demand must be met during the day even for just a short duration of 30 minutes. Singapore must prepare and have the back-up power generators ready to meet any such power surge during any time in the day on any day. If the peak power demand increases by 300MW from previously 7,000MW to 7,300MW, the power system will need to have at least 110% x 300MW = 330MW of additional power generation capacity in order to maintain a reserve margin of 10%. If the required reserve margin is 20%, then the required additional power generation will be 360MW.

This will ensure power demand to remain high and USEP to remain elevated over the next few quarters until a new generator comes on stream, expected in 1H 2026 the earliest when Keppel new plant may come online.

If written back fully the entire RM1.83 billion impariment provision, Genm will add about 28 sen to its NTA. Who knows if this land has also appreciated in value by 400% in past few years like in the case of its Miami land.

@AdCool, that is a fantastic news!

As long as the land validity issue has been legally settled for the tribe, Genm should be able to write back some or all of the earlier impairment. Whether or not Genm and the Mashpee Wampanaog tribe will proceed with developing a casino at the site is not crucial at the moment, the important thing is that the land validity is legalised and so there is value in the land and any building already built at the site.

@AdCool, thanks. I thought of that promissory notes too. I read a Maybank research report in 2020 that there was a chance for these promissory notes to be written back after Joe Biden became the US president, but things have not seemed to move since.

Any new progress on that front lately?

@AdCool, this potential impairment reversal is from which impairment?

I think GenM will naturally try to reduce its US-dollar debts which fetch high interest rates, right after it gets the disposal proceeds in next 2 months.

GenM will need US$500 million first as the bidding fee for the New York casino license bidding, and will only spend money to convert its existing facilities at Queens to a full casino after New York bidding committee awards the casino license to GenM sometimes in Q1 2024. Hence, I think it would be natural to use part of the disposal proceeds to first pare down the high-interest US-dollar debts and save interest expenses for the rest of 2023.

Should GenM win a full casino license in Q1 2024, then it can always raise new fund at a more competitive rates as it will have a full casino licence in the bag (which is very valuable) and US Fed is widely expected to start lowering interest rates from end 2023.

https://www.thestar.com.my/business/business-news/2023/05/02/genting-malaysias-proposed-miami-land-sale-a-win

Asuming GenM leaves aside US$500mil for bidding for New York casino licence, it would still have some US$700mil to retire the bulk of its US-dollar loans which were reported to carry an interest rate of 7.7% p.a.

Annual interest expense saving would come to US$700mil x 7.7% = US$53.9mil or RM238mil, which would be about 20% of the projected 2023 earnings of GenM

UOB Kay Hian (UOBKH) Research says Genting Malaysia's proposed sale of its Maimi landbank is expected to generate net proceeds of RM4.47bil and theoretically increase its 2023 core profit before tax by 20% via lower interest payments.

The deal should see GenM realise a gain on disposal of about US$967mil (RM4.29bil) leaving the group with net proceeds of RM4.47bil or 79 sen per GenM share after the capital gains tax and transaction costs.

This is broadly inline with my earlier projections, except that UOB said GenM's US division had some US$700mil debt, higher than my figure of US$300mil (which was taken from Maybank research note).

The market takes time to appreciate the deep value of Genm and the earnings potential of its assets. For once, this Miami land sale will take a couple of months to complete and the bidding for New York full casino license will take another 6-9 months.

Genting's TauRx alzhemier treatment drug will take months to get any authority approval.
Genting Singapore took some 2-3 months to climb up 30% from S$0.90 to now S$1.15 and 6 months to climb 65% up from S$0.70.

YTL Power has gone up 60% since I first recommended it few months ago.

Patience is the key.

This shows that you have not really got the time to read the article in details and analysed the numbers. Once you have time to do that, we can discuss which part or which number looks too high to you.

The headline tp looks high, that is why I apply a discount to the valuation of Empire Resorts. At 50% discount, Genm should be worth RM5.00 per share, not much higher than JP Morgan's tp of RM4.00.
If I apply a higher 70% discount to Empire Resorts valuation, Genm will be worth RM4.20, closer to JP Morgan's tp.

https://klse.i3investor.com/web/blog/detail/dragon328/2023-04-28-story-h-272368074-Genting_Malaysia_Miami_Land_Sale_Hits_a_Home_Run_in_the_US

A major re-rating for Genm

https://klse.i3investor.com/web/blog/detail/dragon328/2023-04-28-story-h-272368074-Genting_Malaysia_Miami_Land_Sale_Hits_a_Home_Run_in_the_US

A major re-rating for Genm and Genting

Genm had total debts of about RM12.1 billion and total cash of RM3.04 billion as of 31 Dec 2022, resulting in a net debt of about RM9.0 billion.

With the disposal of Miami land, Genm will get net disposal proceeds of RM5,433m - RM974m (disposal gain tax) = RM4,459 million.

So Genm net debt will be halved to RM4.6 billion.

Assuming average interest costs of 5%, Genm will be able to save RM220 million of interest expenses and will have almost 4.0 sen per share more for dividend distribution per year.

@kcwong98, I sent the file to you already in i3 messenger

kcwong98, the HLB report can be posted in i3 but it is difficult to include all the charts and tables. Better to share the pdf file with you.

If we assume daily circulation to remain at 200,000, the increased cover price will add 200,000 x 365 x RM1.00 = RM73 million of revenue per year to Star.

Even if we assume a 10% drop in daily circulation after the cover price hike, it will still add RM73m - 20,000 x 365 x RM3.00 = RM73.0m - RM21.9m = RM51 million of revenue p.a.

And I think the bulk of the increased revenue will flow directly to the bottom line.

Due to the increased contents after the cover price hike, costs will go up for sure. Assuming 20% increase in total costs (paper and content costs) or RM0.40 per paper (earlier RM2.00 cover price was just enough to cover costs, so I assume total costs are at RM2.00 per paper), then cost increase will amount to 180,000 x 365 x RM0.40 = RM 26 million.

So all in, Star will see an increase in earnings of minimum RM25 million p.a. after the price hike.

As Star is already in net cash position with total cash of almost 50 sen per share, it will be able to increase dividend payouts after the cover price hike as operating cashflows will increase to over RM30 million a year, which may be declared as dividends in full or 4.5 sen per year.

I still buy Star newspapers even though the cover price has increased from RM2.00 to RM3.00, most of existing readers I believe will continue buying it as Star is by far the No. 1 English paper in Malaysia.

Star newspaper readership/circulation has dropped tremendously from about 1.0 million per day to now less than 200,000 per day, hence the remaining 200,000 readers are hardcore subscribers, mostly English educated bosses, offices, hotels, corporates and retirees.

Since it raised the cover price, I find that Star papers have increased a lot of new contents, mainly in StarBiz and Star 2 sections. Especially in the daily Star Biz section, I am happy to see a lot more business and finance news from abroad as well as more renowned columnists with more in-depth comments on the business trend and finance world.

Superb growth in MBS earnings! Revenue for Q1 rose 20% from S$907m in 4Q2022 to S$1.1 billion in 1Q2023, and EBITDA rose a much larger 45% from S$363m in 4Q2022 to now S$526m in 1Q2023.

I hope GenS can register similar growth of 20% revenue to S$650m and 36%-39% growth in EBITDA to S$350m for 1Q2023.

@jeffchan1901, I sent the file to you already thru i3 messenger

Hong Leong projects a net profit of RM902 million for YTLP for FY2023, which is inline with my projection. Its projected net profit of RM1,128 million for FY2024 may seem a little on the low side but is already above concensus.

HL projected dividends of 6.0 sen for FY2023 and 8.0 sen for FY2024 are also above the rest. I hope YTLP can beat these projections.

The article shows some info on the UK Brabazon property project. It is a 380-acre master-planned residential and commercial development in Bristol. The first phase was launched in 2020. It says Bristol remains amongst the most sought-after locations in England.

On the outlook, the management guided that the SEA-digital bank JV will start operations in 2024 by leveraging onto the large customers base of SEA-Shopee group, YTL Yes mobile subscribers and other YTL group customers.

Details are lacking at the moment, but I expect this to be a profitable venture.

On green data centre ventures, the management guided that the company had secured a total of 240MW worth of data centre jobs at the Kulai site which can house max 500MW capacity.

Details are a little lacking at the moment as to how much contribution this green data centre venture can potentially generate to YTLP.

That is the reason why most analysts have not factored in any contribution in their earnings projection and sum-of-parts valuation for YTLP.

On Attarat Power in Jordan, the management stated that both power units had already achieved commercial operations in March 2023, and guided that the project should generate 13%-14% project IRR. This is slightly better than my earlier projection.

The management was also confident that the ongoing arbitration case will not affect the existing PPA terms, this is comforting to know.

On Wessex Waters, YTLP management clarified that the recently secured water tariff hikes of 9% from April 2023 will be more than offset the higher cost pressure and index bond pricing impact, and earnings will normalise again in coming years. I hope with that Wessex' earnings will normalise back to RM500-600 million per year going forward.

Management also guided for a potential valuation of RM2.08 per share for Wessex, based on 1.4x RCV less outstanding debts. This is also inline with my earlier valuation of Wessex at 1.3x to 1.6x RCV. Note that the 3 listed water companies in the UK were trading at 1.3x to 1.55x RCV in 2022.

Hong Leong stated that YTLP management guided that the high electricity prices in Singapore would sustain for next 3-4 years, and current earnings of RM300 million per quarter to be sustainable. Management also guided that the minimum valuation for PowerSeraya will be SG$4.1 billion if it is to be listed in Singapore. That works out to be RM1.68 per share of YTLP. That is roughly inline with my earlier estimation of S$4.3b - 4.9 billion above.

thanks ValueInvestor888 for the HL article

@ValueInvestor888, I have added you in i3 messenger

Hong Leong research raised tp for YTLPower to RM1.50 but I do not have access to the research file. i3 did not seem to have published this research article, could anyone please post it if you have it?

@myloh123, same for YTL Corp shares, just hold it for next 2 years and ride on the explosive rally in coming months, or just file it away and look back 10 years later and you may be rewarded 10 times on your investment then

@StartOfTheBull, if you check back share price performance of YTL Corp in 1980s, if you had held it for 10-12 years from early 1980s, you would have been rewarded 30 times on your investment, same as the gains you would have gotten from investing in Public Bank then.

Actually if you have spare capital, there is no harm to buy some YTLP shares if it retreats towards RM1.00. You may treat it as a standalone long term investment, rather than a comparison with YTL Corp.

YTLP is suitable for long term holding as it may give dividend yields of over 10% p.a. from as early as 2025, and share price may double or triple up in few years time.

@Pinky, there are a couple of reasons why you chose YTL instead of YTLPower:

1) YTL owns a majority stake in MCement which will soon report tremendous surge in earnings soon
2) YTL owns many hotel and shopping mall assets which will benefit from economy re-opening
3) YTL owns numerous property and land parcels which may be ready for monetisation, such as some land parcels in Sentul and portions of land in Niseko Japan
4) YTL houses the construction arm of the group which will benefit from a potential revival of HSR project and the huge construction orderbook from green data centre works

The reason why YTLPower share price surges up faster than YTL share price is because YTLP has shown earnings rebound sooner, but as YTLP share price goes up YTL share price will follow at a lag.

If you check back the share price performance of YTL and YTLP in past 10 years, YTL share price used to trade at higher prices than YTLP's when YTL's various assets performed at good times, coupled with the prospect of HSR.

Over longer horizon, the asset classes of YTL such as hotels and resorts will appreciate in value faster than the asset classes of YTLP which are mainly infrastructure type.

In terms of profitability, YTLPower is trading at very low PER. Net profit is expected to be more than RM900 million for FY2023, and over RM1.2 billion for FY2024, reaching RM1.8 billion in 3-4 years when all projects in hand are fully developed.

So EPS will be 11 sen in FY2023, ~15 sen in FY2024 and >22 sen by FY2027, and PER will be just 10x on FY2023 earnings, dropping to 7x in FY2024 and 5x by FY2027.

Another example is Serba Dinamik which reported strong profits in consecutive years before it collapsed. Those were accounting profits that were easy to manipulate, so it is risky to just look at profitability without studying its balance sheet and cashflow statements.

Share price is driven by profitability, it is true but not the entiety.

Net assets are important consideration too, as well as operating cash flows.

Take a look at Star Media that has gone up 50% in past 2 weeks. Star Media earnings are weak but has net cash per share of about 48 sen and NTA of about 90 sen with various properties not re-valued for decades. At 32 sen, it was a bargain and I grabbed some.

RHB was quick to raise tp for YTLPower but the revised tp is still far from the intrinsic value in YTLP's various assets.

PowerSeraya is expected to make PBT of S$360-400 million for FY2023 and beyond, with operating cashflows at S$410-450 million a year going forward. At 7% cashflows yield, PowerSeraya is worth S$5.8 - S$6.4 billion. Minus net debt of about S$1.5b, equity value of PowerSeraya is worth S$4.3b - S$4.9 billion or RM14.2b - RM16.2 billion or RM1.75 - RM2.00 per share.

The current market cap of YTLP is lower than the equity value of PowerSeraya, and you get all other assets (Wessex, Jordan, Jawa Power, green data centres, digital bank etc) all for free.

@kcwong98, I do not think Cypark has a large portfolio of solar power assets. I know it has secured some capacity under LSS2 and LSS3, but each tender limited solar capacity to 50MW per player so CYpark may have a max 100MW which none is completed yet.

Furthermore, the secured tariffs under LSS2 and LSS3 were extremely competitive. And solar panel costs shot up after LSS2 tender award so I doubt the winner could make any positive return, at best low single digit IRR.

I am not sure of other players, but I am confident that YTLP will be able to secure new data centre jobs to fill up the remaining capacity at its Kulai site to house eventually 500MW in next 1-2 years.

First phase of 48MW will be completed in Q1 2024, then 200MW more by 2025.

@goody99, I also did not know until YTLP announced that they secured financing of RM1.1 billion for the first phase of 48MW green data centre job, then only I realised the huge capex requirement and the subsequent concession earnings it will earn for next 15-20 years.

Initially when the company announced the total capex for the entire green data centre project at Kulai site to be RM15 billion, I was a little sceptical of the amount. But when they secured the financing, it means financial close and the lending banks have done the necessary due diligence on the project and been satisfied with the project return and debt service cover, and confident with project execution by the company. I should have no doubt about this project as the banks are willing to take 80% risk and I have full confidence in the power team on project delivery.

As share price has moved up some 35% in past few weeks, we should be more cautious in near term trading and more conservative in terms of projections. It is wise to get prepared for any unexpected shock or negative surprise in upcoming quarterly results.

I would advocate for a longer time horizon of investment, preferably 18-24 months, for YTLP in order for the company to realise its earnings potential. Then we shouldn't be worried too much over short term share price volatility.

The fact that Maybank did not include data centre business into YTLP valuation shows that analysts are generally not familiar with this new business and are not sure how to value it.

I believe as more information is available from the company, analysts will gradually upgrade the valuation of YTLP in next few months.

Maybank projections have not included any contribution from data centre division, which it said would add 5.0 sen to YTLP sum-of-parts valuation for the 1st phase of 48MW data centre job.

This coincides with my own valuation for a project IRR of 12%, debt service cover ratio of 1.15x, equity NPV for this 1st phase will amount to 5.6 sen per share to YTLPower.

When fully developed, this Kulai site will house 500MW of green data centres and will add a total valuation of close to 58 sen per share to YTLP.

Maybank's earnings projection for FY2023 for YTLPower has several issues that do not seem to make sense:
1) It lowered total FY2023 earnings from earlier RM714 million to now RM694 million with no explanation
2) YTLP half year 1H FY2023 net profit totalled RM394 million, Maybank expected YTLP to only register net profit of RM300 million for 2H, which does not make sense as YTLP made net profit of RM264 million in Q2 alone. It implied some impairments and write-off which I am not aware of any at the moment
3) PowerSeraya already made pre-tax profit of RM591 million in 1H FY2023, and Maybank itself stated that PowerSeraya could sustain a pretax profit of SG$90 million (RM300m) per quarter, but it projected a total pretax profit of just RM930 million for Power Seraya for FY2023, implying just another RM339 million of pretax profit from PowerSeraya for Q3 and Q4. This does not make sense and Maybank contradicts itself in this projection. Total pre-tax profit from PowerSeraya for FY2023 would annualise to easily RM1,180 million, a hefty RM250 million more than Maybank's projection

4) Wessex already made pretax profit of RM80+million in 1H FY2023, and it will see water tariffs raised by over 10% in Q4, yet Maybank projected a total pretax of just RM124 million for FY2023 for Wessex. Maybank has obviously not factored in the water tariff hikes in its projections

5) Associates contribution (mainly from Jawa Power) in 1H FY2023 already totalled RM162.4 million, yet Maybank projected a total pretax profit of just RM170 million for entire FY2023, implying just another RM7.6 million pretax profit from Jawa Power for Q3 & Q4, which is ridiculous to me. In the absence of any major technical failure, Jawa Power shall contribute a steady pretax profit of ~RM80 million per quarter.

6) The mobile broadbank division made a pretax loss of RM156 million in 1H FY2023, but Maybank projected a total pretax loss of just RM153 million for FY2023, implying a turnaround of RM3 million profir for this division in 2H FY2023, which seems too optimistic to me

7) Maybank projected a total pretax loss of RM378 million for Others in FY2023, compared to RM104 million loss in 1H FY2023. I am not sure on what ground Maybank projected another RM274 million of losses for Others in 2H