KUALA LUMPUR (Oct 16): A legal complaint by Genting Malaysia Bhd’s (KL:GENM) joint-venture partner filed in Florida could affect its bid for a casino licence in New York, CGS International warned in a note.Shares of Genting Malaysia have remained broadly flat on Wednesday following news that RAV Bahamas Ltd is seeking more than US$600 million (RM2.57 billion) in damages from Genting Malaysia’s subsidiary Genting Americas Inc for the operations of Resorts World Bimini.On its own, the damages would hit Genting Malaysia’s earnings by 46 sen per share if the claim goes through, according to CGS’ estimate. Moreover, “this complaint could affect Genting Malaysia’s bid for a casino licence in New York”, the house flagged.There was another complaint filed in August by the Nevada Gaming Control Board over allegations that Resorts World Las Vegas operated by parent company Genting Bhd (KL:GENTING) had failed to ban criminals from its premises.Shares of Genting Malaysia are hovering near their three-year low after losing more than 17% so far this year, bucking gains on the broader market. At Wednesday’s noon break, the stock was at RM2.24, giving the company a market capitalisation of RM12.70 billion.A majority of research houses covering the stock still kept their ‘buy’ calls, while four analysts have ‘hold’ ratings and only one has a ‘sell’ rating. The consensus 12-month target price (TP) is RM3.16, according to Bloomberg.For now, CGS said both complaints had not affect its valuation, as it had not taken into account the potential upside from a successful bid in New York, having included only Genting Malaysia’s land at book value and kept its TP at RM3.65.The key rerating catalysts for Genting Malaysia are stronger-than-expected Malaysian operations and operating margins, CGS noted, flagging downside risks from higher-than-expected operating costs and slower Malaysian tourism recovery affecting Resorts World Genting.
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