Jerome Favre/Bloomberg

Genting more likely to partner with an incumbent concessionaire – Brokerage

Genting’s bid for the Macau SAR gaming concession public tender could be an attempt to partner with an incumbent concessionaire struggling financially, brokerage Sanford C. Bernstein posited.

The bidding period of the public tender for as many as six 10-year gaming concessions in Macau was concluded on Wednesday, attracting a total of seven companies to tender their proposals, including the existing six operators and a surprise seventh bidder named GMM Limited and linked to Genting Malaysia.

‘We do not expect Genting to win an outright concession and displace an incumbent. However, we see Genting as positioning itself to be a prospective rescuer in the event that a concession holder experiences financial difficulties and may require a partner (such as SJM), or a potential buyer of a willing seller in the future,’ the brokerage stated in a recent filing.

GMM’s bid was conditionally accepted, a procedure for bidders whose documents are submitted without non-essential formalities, or who, for reasons beyond their control duly justified and accepted as such by the tender committee, have not submitted some required documents.

Bernstein analysts considered it unlikely that Genting would gain one concession at the same time another one of the Big Six loses theirs, predicting instead that a more financially vulnerable concessionaire, namely SJM, could partner with the Malaysian hotel and gaming group in the future.

Gaming operator SJM Holdings Ltd has reported in the first semester of this year a total loss attributable to owners of the company of HK$2.75 billion, 88 per cent higher than the losses recorded in the first half of 2021 (HK$1.46 billion)

Analysts and commentators have for long raised concerns over SJM’s liquidity, as it remained the gaming concessionaire in the most troubling financial situation since the pandemic started.

In the dispatch, the brokerage also expressed that Genting has always made its desire to step foot into the local gaming market, with a group affiliate previously developing a small 600-room non-gaming hotel in the Macau Peninsula near Nam Vam Lake.

Genting Hong Kong – which filed for bankruptcy earlier this year – later sold its stake in the project, now known as Treasure Island Resort World Hotel, with the brokerage pointing out that is unclear what residual ownership Genting may have in this project.

The resort is expected to open in December, 2022 with its offerings revealed this year, after delays connected to the pandemic and funding issues.

‘Genting has also been mentioned as having a good relationship with Chinese authorities and had sponsored the development of the Genting Snow Park in Hebei Province which was used as one of the venues for the 2022 Winter Olympics. There are other ties in China that could prove valuable to Genting’s pursuit of eventual entry into Macau,’ the brokerage added.

‘Genting also has experience developing theme parks as part of its integrated resorts in Malaysia and Singapore and has extensive customer databases in Asia.

However, the Bernstein analysts warned that the Malaysian group still held a multitude of issues that would need to be resolved if it was to receive a concession, something it considered unlikely to be resolved in the next 2-3 months.

The Macau government aims to have the results of the public tender for the new 10-year gaming concessions to be ready by year-end.

Following the finish of the bidding process, the responsible gaming committee will analyse the accepted bids and initiate discussions and consultation with the companies that have been accepted into the race.

The seven bidders in this race are: Wynn Resorts (Macau) S.A., Venetian Macau S.A., Melco Resorts (Macau) S.A., MGM Grand Paradise S.A., Galaxy Casino S.A., SJM Resorts S.A. and GMM S.A.