Genting hungry for new gaming markets

Genting, competing with Las Vegas Sands and MGM Resorts to dominate the Asian casino market, may target assets in Japan, South Korea and Mongolia, analysts said.

Of those markets, Japan may be the most attractive, according to Michael Paladino, a New York-based gaming analyst at Fitch Ratings. "It could have the potential to be a larger scale (development) because of the size of the economy and the fact that it is a destination in itself, more so than other markets," Paladino said.

With limited growth at home and a lagging share price, Asia's second-largest gaming group by market capitalisation is looking to expand its global footprint. The company, best known for its Genting Highlands casino complex near Kuala Lumpur and Singapore's Resorts World at Sentosa, has invested in the Philippines and Vietnam after missing out on a concession in Macau more than a decade ago.

Genting Berhad is the investment holding company of the Genting Group, which comprises listed companies such as Genting Singapore, Genting Plantations and Genting Malaysia. Genting Singapore said on Friday it had acquired a small stake in Echo, sparking talk of a takeover of the us$ 3 billion Australia casino firm.
James Packer is expected to meet Malaysian casino magnate KT Lim as early as this week after Mr Lim's Genting Casinos revealed last Friday that it had built a strategic stake in Echo Entertainment, throwing a wild card into the battle for control of the Sydney casino group.

Crown is believed to be confident that Genting is supportive of its plans for Echo, and Mr Packer has heaped praise on Mr Lim, telling The Australian: "I think that (Genting chief executive) KT Lim has done an amazing job building his company."
Genting's biggest casino is in Singapore but there is speculation the group could be interested in striking a deal with Mr Packer to secure a foothold in Macau, perhaps in return for supporting Mr Packer's Echo plans.
Crown has two hotels in the province through a joint venture with Lawrence Ho's Melco Group. It is looking to build a third.
Cash-rich
Genting Berhad was sitting on us$ 5.51 billion in cash and equivalents as of the end of March, so it could conceivably pay for a deal of that size without borrowing.  Last month, Genting said it got approval to raise us$ 636 million through a 20-year bond programme, after Genting Singapore raised a total of us$ 1.79 billion through perpetual securities in March and April.

Still, the company's debt financing is more manageable compared to its peers. Genting Berhad's debt-to-equity ratio was 0.57 versus 1.12 for Las Vegas Sands and 2.27 for MGM Resorts, according to Thomson Reuters data. "It is in Genting's interest to speed up the acquisition process," said Loke Wei Wern, an analyst with CIMB Research. "They are paying out interest on their loans and that's quite a lot of money."

Although Genting's casino properties in Malaysia and Singapore are highly profitable, growth is limited compared with the booming global gaming industry, putting the company under pressure to seek out more promising options.  Genting's shares have fallen about 13 percent so far this year, compared with a 0.6 percent gain in the Thomson Reuters Asia Pacific Casinos & Gaming Index.

In Singapore, the government restricts casinos from marketing to locals, and junket operators are not allowed to provide credit to VIP players, which limits their appeal with high rollers. "With (Sentosa) getting close to the end of its development phase, it's the right time for the group to start looking at what could be coming up in future," said Grace Ho, a fund manager at Lion Global Investors who covers Asian equities.