Posted by dragon328 > 2023-01-06 19:53 | Report Abuse

Actually I may have under-calculated the effective stake of Genm in the new listing Genting US. When Genm & Kien Huat inject the first 30% stakes of Empire Resorts into the new listing at US$1.0 billion, then inject the remaining 70% at US$7.7b, the total paid-up of Genting US would be just US$(6+1+7.7+1) = US$15.7b, so Empire Resorts should have an effective stake of 7.7/15.7 = 49% and not 43% as miscalculated in the article. Hence Genm should have an effective stake of 49% * 76.3% = 37.4% in Genting US.

Genting US would then re-rate up from US$15.7b to US$18.0b, giving some 15% upside to investors in the new listing entity.

Posted by Income > 2023-01-07 07:01 | Report Abuse

Dragon, thanks for your writing. It’s fingers licking good.

Posted by twynstar > 2023-02-25 12:37 | Report Abuse

Excellent write up!! Just wonder how you count the net cash? Where to find the figure of net debt RM18.2b, cash proceeds RM26.3b ?

After the latest 4QFY2022 report, HLIB estimated Genting Berhad has net cash of RM 800million.

Posted by speakup > 2023-02-25 13:27 | Report Abuse

when your share drop, recycle old good news to push up

Posted by dragon328 > 2023-02-25 14:52 | Report Abuse

@twynstar, if you look at Genting's 3Q 2022 financial reports, it had total debts of RM41.2 billion and cash of RM23.0 billion, so net debt = RM41.2b - 23.0b = RM18.2 billion.

The cash proceeds of RM26.3 billion would be from the injection of 100% Resorts World Las Vegas (RWLS) valued at US$6.0 billion into the new US listing and getting all cash option of US$6.0 billion or RM26.3 billion, without having any stake in the new US listed entity. Genm would inject its Empire Resorts in exchange for cash and a 37.4% controlling stake in the US listed entity. Kien Huat would own another 11.6% in the US listed entity such that Genm/Kien Huat would own a collective 49% stake in the US listed entity.

Posted by dragon328 > 2023-02-25 15:08 | Report Abuse

It was old news that LKT mentioned about a US listing in July 2021 after RWLV opened its door. He said he wanted to wait for the numbers from RWLV to pick up and confidence to return as he sought for a good timing for a US listing.

Now I think the timing is ripe for a US listing as RWLS just reported record revenue of US$237 million (+42% y-on-y) and EBITDA of US$49 million (+119% y-on-y) for 4Q 2022 quarter, a big jump from 4Q 2021. Hotel occupancy increased to 88% and average hotel room rate increased to US$240+.

This is encouraging as the annualised result of this 4Q 2022 almost reaches my projected EBITDA of US$204 million for 2024 in my article above. With such a momentum, RWLS may be able to achieve EBITDA of US$240 million in 2023. At a valuation of 20x EV/EBITDA or 5% cashflow yield, Genting may be able to get a value of US$4.8 billion for injecting into a new US listing. The IPO proceed would be more than enough to settle all outstanding debt of US$4.3 billion at RWLS, making it debt free and hence EBITDA of US$240m would equate operating cashflows of US$240m as there would be no more debt service interests (currently at c. US$195 million a year).

Posted by dragon328 > 2023-02-25 15:15 | Report Abuse

Fortunebull777, it is true that Genting 4Q 2022 result was dented with an impairment loss of RM304.8 million and another investment loss of RM362.9 million. I am not sure where these impairment loss and investment losses came from, and I hope these will not recur.

Posted by dragon328 > 2023-02-25 15:27 | Report Abuse

I reckon that the timing is ripe for a US listing in this Q1 or latest Q2 2023, giving the growth momentum seen at RWLS and the prospect of a full casino license for Empire Resorts at New York city. The risk of getting a good valuation for its US assets will be higher beyond Q1 as US Fed continue hiking interest rates, as it may mostly impact the valuation of its Miami land and cashflow valuation of RWLV.

It is actually imperative for Genting to seek a US listing so that it can monetise its investment in RWLV and reduce its debts. In its latest report on Genting Bhd, CIMB valued RWLS at zero equity value, as it valued it at close to book value of US$4.3b minus debt of also US$4.3b. After Genting injects RWLV into a US listing say for US$4.8 billion, RWLV would be able to pare down all debts and have net cash of US$0.5 billion, and the equity value would become US$4.8 billion (zero debt). Hence in CIMB's sum-of-parts valuation of Genting, total equity value would go up by US$4.8 billion or RM20.6 billion or RM5.32 per share.

In terms of cashflows, RWLV would be getting over US$200 million of operating cashflows a year and potentially distribute all of it to its shareholders. Hence Genm and Kien Huat who would collectively own 49% stakes in the US listed entity would get almost US$100 million or RM430 million cash dividends from the US listed entity just from RWLV alone.

Posted by twynstar > 2023-02-25 18:10 | Report Abuse

Thank a lot for the prompt reply, dragon !! Very informative and open my eyes how to evaluate Genting again. Looking forward any latest update from you.

I also deeply believe that Genting is extremely undervalued. Current market price provide value investor a lot of margin of safety. I started collecting Genting since May 2020, never regret. Hope still has chance to collect at cheap price.