Bad News for Genting: Yokohama Out On Casino/ Integrated Resorts Plans
According to Morgan Stanley Asia Ltd, Takeharu Yamanaka’s decision to back out on hosting a casino complex/Integrated Resort is set to have significant negative implications on Genting Singapore Ltd, one of the city's casino-partner suitors.
Genting Singapore collaborated with a Japan-based entertainment and gaming conglomerate, Sega Sammy Holdings Inc., for the Yokohama bid. Genting Singapore also Kajima Corp to do the construction work.
On Friday, the new anti-casino mayor of Yokohama city confirmed that effective October 1, the city would abolish the office assigned to promoting the Integrated Resort initiative championed by his predecessor, Fumiko Hayashi.
Tokyo has not yet communicated whether it will aim to host a casino under Japan's liberalization policy. Under the policy, up to three large-scale casino complexes and corresponding tourist facilities will be allowed in Japan.
Currently, the deadline for local authorities to submit their casino resort plans to the central government is April 28, 2022.
Analysts Praveen Choudhary and Gareth Leung released a note on Friday stating that the project from Yokohama would have brought Genting Singapore an NPV of SGD 0.13 (USD 0.10) per share.
According to Morgan Stanley, Genting Singapore, Operator of Resorts World Sentosa Casino Complex, apparently sitting on cash reserves worth SGD 3 billion, is less likely to declare a higher dividend.
Genting Singapore Ltd also pledged to the Singaporean government to start a second phase of revamping Resorts World Sentosa by investing SGD 4.5 billion. The company has already spent SGD 1 billion on purchasing land.
On the other hand, Morgan Stanley believes that Yokohama's decision will positively affect Melco Resorts that had a USD 4.8 Billion debt at the end of June. Melco Resorts, which runs casinos in the Philippines, Macau, Cyprus, decided to close their offices in Yokohama while maintaining a representative in Tokyo.
The chairman, Lawrence Ho Yau Lung, stated that the group remains committed to exploring opportunities to set up a world-class integrated resort in Japan.
