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Genting wins bid for Singapore casino

Published: December 11, 2006

KUALA LUMPUR: Shares of Genting, the biggest casino operator in Asia by market value, recorded their biggest jump in at least 19 years Monday after the company won a bid to build a $3.4 billion resort in Singapore.

Genting shares jumped 2.75 ringgit, or 9.4 percent, to 32 ringgit on the Kuala Lumpur stock exchange, the biggest increase since Jan. 14, 2000.

The Singapore resort is expected to pay for itself in seven years and generate a 15 percent annual return, Lim Kok Thay, chief executive of Genting, said Monday. The company beat Eighth Wonder and Kerzner International in winning the right to build the casino- resort on Sentosa Island. It took control of Stanley Leisure earlier this year, giving it access to the customers of the biggest British casino operator.

"They are certainly on their way to being a global player," said Steven Tan, an analyst at CIMB Securities in Kuala Lumpur, who has a 12-month target price of 35 ringgit. "In terms of assets they have global exposure. They still obviously have to prove themselves."



Genting also owns Star Cruises, the largest Asian cruise line and a partner in the Sentosa bid, and Genting Highlands, a cluster of hotels around casinos on a mountain top near the Malaysian capital. Shares of Star Cruises rose as much as 53 percent in Hong Kong.

The Singapore resort is to have 1,830 hotel rooms, the world's largest aquarium and a Universal Studios theme park.The winning bid prompted banks to increase target prices for Genting stock. Credit Suisse Group lifted its target to 37.25 ringgit from 28.5 ringgit. UBS raised its price forecast to 34.2 ringgit from 29.7 ringgit.

Genting expects the resort to generate 15 billion Singapore dollars a year in tourism spending, and plans to spend 200 million dollars a year to rejuvenate the project over 30 years. The company has said the casino could generate as much as $2 billion in gambling revenue in the first year.

Lim is betting the Singapore project will help the company leapfrog Harrah's Entertainment and Wynn Resorts to become the world's third-largest gaming-operator by market value.Genting plans to fund the project two-thirds by debt and one-third by equity, the company said.

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