Genting Singapore to co-develop a USD2.2b integrated resort in South Korea

With China’s Landing International Development.

According to OSK, Genting Singapore announced that it will jointly develop a USD2.2bn integrated resort on Jeju Island, South Korea together with China’s property developer Landing International Development (LID).

Here's more:

GENS will pay SGD97.1m for its 50% stake in the joint venture (JV) and the group has also agreed to i) provide shareholders’ loan amounting to SGD97.1m to the JV and ii) subscribe for 5% stake in LID for SGD39.8m. Given GENS’ sturdy operating cash flow of over SGD1bn p.a., coupled with its healthy balance sheet, we believe funding of this development would not pose any strain to its books.

South Korea currently has 17 casinos, with patrons coming from China and Japan primarily. Local citizens are however restricted from gambling in all but one casino, i.e. on Gangwon Land. With this ban in place, we believe GENS is looking to capitalise on the fast-growing Chinese tourists market in South Korea. Last year, over 4m (+40% y-o-y) Chinese visited South Korea.

Jeju Island, which is located 2-3 hours away from major China cities such as Beijing and Shanghai by flight, on its own attracts about 2.5m foreign visitors p.a.

While this latest venture could help GENS to establish its regional gaming footprints, we caution that existing prohibitive gaming laws in South Korea could limit earnings potential over the medium term. Maintain NEUTRAL with our FV unchanged at SGD1.49.