Inside Asian Gaming

November 2010 | INSIDE ASIAN GAMING 21 Good news is no news There’s even better news. There had been fears that RWG—run by a specialist local unit Genting Malaysia (GM)—would lose large amounts of business to its swankier, newer cousin RWS and toMarina Bay Sands (MBS), run by Las Vegas Sands Corp. The worries may have been overplayed. In February, on the eve of RWS’s opening in Singapore, investment bank Merrill Lynch said in a research paper it was concerned RWG might be cannibalised to the tune of US$202 million, or approximately 20% of its forecast US$1.1 billion gaming revenue for 2010. But in September, CIMB Research, part of Malaysian investment bank CIMB Group, said in a research paper: “We along with the market, had expected cannibalisation to take two forms in 2Q [2010] i) MBS’s debut in Apr 10 to eat into RWS’s share and ii) Singapore’s two IRs [integrated resorts] to cannibalise GM’s gaming pie. Instead GM held its own.” CIMB said that while Genting Malaysia’s core net profit for the second quarter of 2010 had fallen 11% quarter on quarter, when judged on a year on year basis it had actually risen 8% to RM339.7 million (US$110.1 million), from RM314.7 million in 2009. Westward ho Given, however, that Genting Malaysia is unlikely to be given permission to expand its casino operations within Malaysia, it is looking outside the country for fresh growth. In the second half of the year Genting Malaysia caused controversy among some of its shareholders by purchasing Genting Singapore’s portfolio of 44 United Kingdom casinos for S$527.1million (US$409.4million). Some investors considered it a sweetheart deal hurried through by Genting Group to take the UK casinos off Genting Singapore’s balance sheet, and couldn’t see the value for GM. So agitated were they, that 38% of them voted against the move. It was a rare display of public dissent in terms of Malaysian corporate culture. In late October, though, a bigger picture strategy emerged. Genting Malaysia announced plans to develop a large casino and entertainment complex at one of the sites for the 2012 London OlympicGames. If approvedbyNewhamCouncil in east London, then building work on the project, in partnership with UK company Apollo Resorts & Leisure, would start immediately after the Games in the third quarter of 2012, with a planned opening in 2013. Both Genting and Apollo will hold a 50% equity interest in the joint venture with each party initially contributing £2.95 million to the scheme. Apollo will apply for the gaming licence. Once approved, Genting Malaysia will buy the licence from Apollo for £5 million (US$8 million) and transfer it to Genting Casinos UK Ltd., a unit of Genting Malaysia.