KUALA LUMPUR (Nov 2): GENTING BHD rose sharply today (Friday) in anticipation that an 18-year long mega casino project being planned in South Korea will provide it the much-needed investment opportunities outside Malaysia, according to analysts and dealers.
At 3.47pm today, Genting share rose 13 sen to RM9.03 after hitting an earlier high of RM9.09. It was one of the top turnover stocks, with trading volume of 7.88 million shares.
The rise of Genting was against a fall of the general market in the backdrop, with the FBM KLCI losing 14.5 points to 1661.22.
On Wednesday, news broke that the South Korean (SK) port city of Incheon has partnered with a group of investors to develop a US$290 billion leisure and gaming destination to rival Macau and Las Vegas.
The project, called 8-City, will be located in Yongyu-Muui island district in Incheon and build over 18 years across 80 sq km area.
As the SK government recently liberalised laws to lift a major hurdle for foreign investment in opening foreigners-only casinos, analysts at Hong Leong Investment Bank see opportunities for Genting Bhd.
"The partnership could be a win-win situation for all parties in turning SK into a gaming destination… Casino players could benefit given the opportunity to penetrate into a new market.
"We would not be surprised if Genting is interested as we have earlier shortlisted SK as one of the group’s potential new market, given the country's well established infrastructure and high GDP per capita," said Low Yee Huap, head of research for HLIB in his report.
He has an "overweight" call for the gaming sector and has given a target price of RM10.24 per share for Genting,
A senior dealer with another bank said: "Genting is looking for ways to expand outside Malaysia and this is one opportunity. With its track record in casino operations in Malaysia and globally, there is merit to believe that Genting may gain a footing in South Korea."
In fact, Genting share has not brightened up for some time due to the perception of election risk. Since mid-September, it had hovered at below RM9.00 following news reports that PAS might close down Genting casinos if PAS won the coming state election in Pahang.
According to Hong Leong, other catalysts for Genting include the higher-than-expected visitors' arrival into Malaysia, Genting Malaysia's UK development completed earlier-than-expected and the license to develop full-scale casino will be granted by the New York legislators.
Written by Ho Wah Foon of theedgemalaysia.com
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