News Update
Genting Singapore’s subsidiary under Genting UK plc has been selected as the new operator of the casino at the soon-to-be-renamed Nile Ritz Carlton Hotel, Cairo. The hotel owner, Misr Hotels Company, a government-controlled company, intends to undertake a major US$100m renovation and refurbishment of the 50-year hotel soon and re-open it as the Nile Ritz-Carlton in early 2012. Genting UK has been awarded the casino concession for the new hotel for an initial period of 10 years and plans to open the casino under the brand “Crockfords on the Nile”.
As no other details were given on the casino, we are unable to assess the impact of this on GS’ financials. We understand, however, that in Egypt, the gaming market is going strong, given that there are already 20 other small casinos in Cairo itself. We note that in the Middle East currrently, only Lebanon, Eqypt and cruise ships in Israel have licensed casinos. Despite the scanty details, we believe this is a good move for GS, as investment cost is likely to be minimal while it would be able to build up its Crockfords premium brand in a new market and strengthen its casino network.
No change to forecasts, until we obtain further details from management. We maintain our Outperform call, with fair value of S$1.33, based on a combination of EV/EBITDA and DCF methodologies.
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