Fair Value: S$1.50
Japan to submit casino bill?
• Bloomberg reported that Japanese legislators are planning to present a bill to legalise casinos as early as this year.
• Hiroyuki Hosoda, chairman of a cross-party group of lawmakers promoting casino development in Japan said that the group aims to submit a casino bill to the next Diet session that is expected to start next month.
• It aims to pass the bill in the following session of parliament next year.
• Hosoda also said that it could take five years for the first casino to be operational after the law is passed.
• According to Genting Singapore’s (GenS) previous conference call, the first part of the law, which is supposed to be passed this year, would designate the location of the casinos.
• The second part of the law, which is expected to be passed next year, would encompass the rules and guidelines for the operation of the casinos.
• Although it would take a long time before the bidding process even takes place, we believe that this development is positive for the regional casino industry.
• Industry experts estimate the casino industry in Japan to be worth US$10bil a year. The casino industry in Singapore recorded revenues of S$5.2bil in 2012.
• Front-runners for the development of casinos in Japan include Las Vegas Sands and GenS. Wynn Resorts and MGM Resorts have also said that they would consider investing billions of dollars in Japan.
• GenS has said before that it would enter into a joint venture with a local company if it were to expand into Japan. Cost to develop a casino in Japan is estimated to be as high as US$10bil. GenS’ net cash stood at S$1.7bil as at end-FY12.
• We maintain a HOLD on GenS. The group is currently trading at FY13F PE of 31.5x and FY14F PE of 27.6x.
Publish date: 20/09/13