Genting Singapore Plc., operator of the Resorts World Sentosa casino resort in Singapore, is pumping more money into its South Korea casino project.
In a recent disclosure to the Singapore Stock Exchange, the Singapore-based gaming firm announced that its’ indirect subsidiary Happy Bay Pte. Ltd. has subscribed for an additional 15 million new ordinary shares at KRW10, 000 (US$8.65) each, in Landing Jeju Development Co Ltd. (LJDC) The total subscription made by Happy Bay to Landing Jeju is worth KRW150 billion (US$ 131.83 million).
According to Genting Singapore, the equity interests of Happy Bay and Landing International Development Limited (LIDL) – a Hong Kong-listed real estate firm – in LJDC remain unchanged at 50 percent following the additional equity investment.
“The Additional Equity Investment is not expected to have any material impact on the consolidated net tangible assets and earnings per share of the Company for the financial year ending December 31, 2016. None of the Directors or substantial shareholders of the Company has any interest, direct or indirect, in the Additional Equity Investment other than through their respective shareholdings in the Company,” Genting said during Monday’s filing.
LIDL has yet to file a disclosure before the HongKong Stock Exchange announcing that it had made a pro rata increase in its cash contribution to the equity investment in the Jeju scheme.
Bernstein: Genting Singapore unlikely to deliver high return to investors
Meanwhile, Investment firm Sanford C. Bernstein Ltd in Hong Kong, said it was downgrading Genting Singapore’s stock to “market perform” from “outperform,” with a target price of SGD0.80 (US$0.6), from SGD0.90 (US$ 0.67) previously.
Bernstein analyst Vitaly Umansky expressed concern that Genting’s management may be destroying shareholder value by investing company cash in terrible projects.
“At this stage, we see the likelihood of gaming legalization in Japan in the foreseeable future to be of slim probability. Management has alluded to certain new project under review for investment, but has provided no details,” Umansky said in its report to Berstein. “ While we do not have any details on any such potential project, we are increasingly concerned that such project has potential to generate low ROI and is not an efficient way of enhancing shareholder value. A significant concern would be if Genting Singapore became involved in Genting Bhd.’s development of Resorts World Las Vegas, which we view as a low ROI project.”
