JULY 8 — The Edge Financialdaily reported today that Genting Malaysia was among a few bidders eyeing a US$2.1bn mega theme park project in Gujarat, India.

There are reports that the likes of Disneyland, Canada World and Sentosa Singapore could be among the bidders for a mega theme park project in  India. As Genting Malaysia does not possess theme park expertise to the level of the above-mentioned players, we believe that the group could be eyeing to partner one or all of the above players except Disneyland, which may not want to be associated with a casino, to set up an integrated resort with a casino, where its expertise lies.

However, we note that the Gujarat Government rejected a proposal some time in July 2010 for the development of a “casino zone akin to Las Vegas facilitating all types of gambling”. The proposed development was to be known as “Indus Oasis’ and was touted as a major entertainment project to be developed on the Khadir oasis in the Greater Rann of Kutch.

Protests from religious groups could have been one of the factors that led to the Gujarat government rejecting the casino zone project back in July 2010 as Gujarat has one of the highest Muslim populations in India at roughly 9 per cent of its population base. The key to Genting Malaysia’s participation

would be a revival of the state governments blessing for such a casino zone. Anyhow, we think that the above-mentioned speculation, even if it does

materialise in the future, would be very much at the preliminary stage given the various stumbling blocks.

Gujarat among top 3 wealthiest states in India. Although the overall income disparity in India remains wide, we note that Gujarat is among the top 3

wealthiest states in India, behind Goa and Hariana, with average per capita income being nearly 40 per cent above India’s average per capita income. That said, gambling in India remains an attraction only to the upper class, and hence we do not view the casino component of the project as being highly profitable relative to Genting Malaysia’s overall existing volume-driven mass market casino profit base

Maintain BUY and Fair Value at RM4.10 as the combined incremental

upside of all its various overseas expansion plans could be relatively material on a combined basis. Its robust operating cash flow in excess of RM1.6bn and free cash flow of RM800m provides the group ample capacity to undertake a few medium to relatively large-scale projects concurrently. Our Fair Value is maintained at RM4.10.

* These recommendations are solely the opinion of the respective research firms and not endorsed by The Malaysian Insider. The Malaysian Insider shall not be liable for any loss arising from any investment based on any recommendation, forecast or other information contained here.