Genting shares gain after Wynn Resorts settlement

Genting is RHB’s top pick for the sector as it is a cheaper proxy to Genting Malaysia and Genting Singapore


GENTING Bhd rose eight sen or 1.17% to RM6.89 at the market close yesterday after its subsidiary, Resorts World Las Vegas (RWLV), and Wynn Resorts Ltd reached a settlement agreement on a dispute involving trade dress and copyright infringement claims surrounding the design of the US$4 billion (RM16.44 billion) Resorts World project in Las Vegas.

Genting gained RM311.5 million in market capitalisation yesterday with 8.07 million shares traded. The firm is now valued at RM26.53 billion.

Its public affairs and development senior VP Michael Levoff said the RWLV project will be the launching point for the next generation of integrated resorts, and the aesthetics of the project will play an important role in its future success.

“While the company believes the design to have had differences with Wynn Resorts and Encore’s once fully realised, after further consideration and conversations with the Wynn Resorts team, we have directed our design team to make several changes that will clearly differentiate the two properties.

“This mutually beneficial settlement will allow Genting to continue to develop Resorts World Las Vegas with minimal impact to cost and the overall project timeline,” he said in a joint statement on Monday.

Wynn Resorts chief communications officer Michael Weaver said the resort’s world-renowned signature architecture and design are among the elements that have built its brand’s reputation for excellence.

“Resorts World Las Vegas’ initial design had elements which had similarity to our resorts in Las Vegas, Macau and Boston. The new design changes offered by Genting will resolve the concerns we expressed about the similarity of the design.

“We welcome and look forward to Resorts World Las Vegas’ opening. Their future success will benefit all of Las Vegas,” he added.

Last month, Wynn Resorts filed a five-count trademark infringement and unfair competition lawsuit against RWLV, claiming that the similar designs between the resorts have already confused some people, while possibly misleading consumers that the two could be affiliated with one another.

The five counts of the suit were federal trade dress infringement; unfair competition and false designation of origin; federal trademark dilution; state trademark dilution; and copyright infringement.

RHB Research Institute Sdn Bhd has raised Genting’s target price from RM8.40 to RM8.83. In a company update yesterday, the research house noted Genting is trading at a trough enterprise-value-to-Ebitda of 5.7x (-2SD) versus its five-year mean of 7.3x and the regional peer average of 11.2x.

It added that Genting’s latest foreign shareholding stands at a low of 43% (as of Dec 14, 2018) since 2015.

“Genting is our top pick for the sector as it is a cheaper proxy to Genting Malaysia Bhd and Genting Singapore plc’s core operations. It is trading at a high holding company discount of 42%.

“We expect to see a mean reversion in the stock price after it underperformed the market in 2018, and also on the expected recovery of Genting Malaysia.

“Meanwhile, the outlook for Genting Singapore’s operations remains steady,” it added.