Genting to gain from Landmarks’ gaming foray

KUALA LUMPUR: Landmarks Bhd’s possible venture into gaming operations in Indonesia’s Bintan Island has put its parent Genting Bhd in the spotlight as analysts believe it would enable the latter to expand its clientele base amid a wider regional presence.

Moreover, the presence of a gaming unit within Landmarks’ RM4.07 billion “Bintan Treasure Bay” mixed development in Bintan Island’s Treasure Bay enclave is also seen as a catalyst for potential upsides in the value of real estates in the integrated resort, analysts said.

Speaking to The Edge Financial Daily, a Landmarks official said the company would study the feasibility of running a gaming unit in Bintan after the green light from the Indonesian authorities.

“We are still deliberating on the gaming business, which will be Landmarks’ first,” the official said.

The Edge Financial Daily reported last Friday that Landmarks had received consent from the Indonesian authorities to undertake gaming business in Treasure Bay following the zoning of the enclave as an exclusive integrated tourism zone (EITZ).

Treasure Bay’s new status follows an agreement between Landmarks’ 74%-owned Bintan Treasure Bay Pte Ltd (BTB) and Indonesia-based PT Wisata Hiburia (PTWH) for the zoning of 3.4 million square metres of leasehold land belonging to BTB subsidiary PT Pelangi Bintan Indah.

The deal also allows Landmarks to conduct other businesses including medical tourism, besides multimedia and information technology hosting, Landmarks told Bursa Malaysia last week. BTB is undertaking the development of integrated resorts (IR), commercial and residential properties at Treasure Bay.

The zoning fee payable by BTB to PTWH for designating the proposed development as an EITZ will be based on 10% of the net profit on the sale of the proposed IR development.

OSK Investment Bank said: “It is a good thing for Genting as it can diversify geographically, and have a bigger captive market to cross-sell its products.” Genting via wholly-owned Phoenix Spectrum Sdn Bhd holds a 30.31% stake in Landmarks.

CIMB Research, meanwhile, said the inclusion of Landmark’s gaming business was positive for Genting as the resort and casino operator would have key interests in three gaming licences within Southeast Asia, one each in Malaysia, Singapore and Indonesia.

“This cements Genting’s position as the leading gaming player within the region,” CIMB said in a note last Friday.

CIMB, which maintains an outperform on Genting, with a target price of RM11, added that the fact that Landmarks had also obtained approval for other businesses, apart from gaming, also significantly enhances the viability and value of its Treasure Bay project.

The RM4.07 billion Bintan Treasure Bay aims to capitalise on the anticipated increase in tourist arrivals and rising affluence in the region, according to Landmarks filings to the exchange in December 2006.

Landmarks had in October 2007 signed a memorandum of understanding with China Metallurgical Group Corporation as initial arrangements for the possible appointment of the Chinese entity as the main contractor for the project.

Construction of Bintan Treasure Bay is expected to start in the second half of 2008, and due for completion within eight years.

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