Genting still on solid ground with Jeju JV: CIMB

The integrated resort will push through as planned.

Genting Singapore’s $2.2b Jeju investment is not at risk, and the integrated resort is even expected to revitalize the company’s underperforming stocks.

In a report released today, the CIMB retracted its June 16 release, which stated that Genting’s land is earmarked for healthcare and education.

Today’s report noted that Genting’s land in Jeju is actually intended for a history theme, which will be appropriate for the project’s Myth and History Theme Park.

According to CIMB, “We retract our view that the Jeju Island project is at risk and now expect that
the US$2.2bn integrated resort JV will go ahead as planned. The underperformance of GENS’s share price since the announcement of the JV shows that the market has low expectations for the deal and any positive newsflow would be a strong re-rating catalyst for the stock.”

Here’s more from CIMB:

The recovery of earnings growth at Resorts World Sentosa would be another catalyst for GENS’s share price, in addition to the opportunities from Japan’s liberalisation. There are no changes to our FY14-16 EPS forecasts and RNAV-based target price.

GENS’s share price has underperformed the market by 9% since the announcement of the JV in February. The market has clearly not factored in any value creation from the deal and has probably priced in the worst-case scenario.

Note: We refer to an article initially published here on Monday, June 16, which was based on CIMB’s report entitled “Reassesing Jeju” released on the same date.

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