South Korea’s casino industry has benefited from the downturn in Macau’s casino industry and a number of gambling operators across the world are looking to invest heavily into the South Korean casino industry. Genting Singapore Plc who operates the Resorts World Sentosa Singapore casino has continued to pump in money into South Korean company Landing Jeju Development Co Ltd. (LJDC).

Genting Singapore recently disclosed in a report to the Singapore Stock Exchange that it had once again invested into LJDC. The company through its Happy Bay Pte. Ltd, an indirect subsidiary subscribed for an extra 15 million new ordinary shares at the rate of US$8.65 (KRW10, 000). This brings Genting Singapore’s total investment in LJDC via Happy Bay Pte. Ltd to US$131.83 million (KRW150 billion).

In its filing, the company stated that the equity interests of Hong Kong listed real estate firm Landing International Development Limited (LIDL) and Happy Bay continue to remain the same even after its latest investment. The equity interests currently state at 50 percent. LIDL is yet to file a report with the Hong Kong Stock Exchange making a disclosure of its new investment and pro rata increase in the South Korean casino project.

In its report to the Singapore Stock Exchange, Genting Plc said “The Additional Equity Investment is not expected to have any material impact on the consolidated net tangible assets and earnings per share of the Company for the financial year ending December 31, 2016. None of the Directors or substantial shareholders of the Company has any interest, direct or indirect, in the Additional Equity Investment other than through their respective shareholdings in the Company.”

Sanford C. Bernstein Ltd, an investment firm based in Hong Kong rated Genting Singapore’s investment into the South Korean project as a poor decision and decided to downgrade the company’s stock from ‘outperform’ to ‘market perform’ and reduced the target price from SGD$0.90 TO SGD $0.80. Vitaly Umansky, an analyst from Bernstein stated that Genting Singapore’s management could end up destroying shareholder value by choosing poor projects to invest its financial resources.

Bernstein believes that the chances of Japan legalizing the gaming industry in the near future is extremely slim and terms new investment into Japan’s casino industry as highly risky with very little return on investment (ROI). Analysts believe that investing into Japan’s casino industry at this point of time will put shareholder value at risk. Bernstein also stated that Genting Singapore would expose itself to greater risk if the company decided to invest in Resorts World Las Vegas which is being developed by Genting Bhd.’s as it has an extremely low ROI.

 

This article has been updated to change “collapse” to “downturn”

Leave a Reply

Your email address will not be published.