Genting Could Support Struggling Macau Concessionaire

In the days since Genting Malaysia surprised the gaming industry by revealing its application for a Macau gaming license, the prevailing wisdom among analysts is that the company won’t be successful in beating an established incumbent.

That doesn’t mean the unit of conglomerate Genting Bhd. is going quietly into the night. The company is proceeding with its Macau efforts, and regulators accepted the proposal, confirming it’s in good standing. While that’s far from a guarantee Genting will unseat a current concessionaire, the company could enter the special administrative region (SAR) by providing financial support to an ailing competitor. That’s the sentiment of a team of Bernstein analysts led by Vitaly Umansky and Shirley Yang.

We believe Genting is positioning itself as a prospective partner or buyer of an existing operator in the event that a concession holder experiences financial difficulties and may require a partner or could be open to being acquired, with government consent,” wrote the analysts in Monday note to clients.

The current Macau license holders are Galaxy Entertainment, Melco Resorts & Entertainment (NASDAQ: MLCO), MGM China, Sands China, SJM Holdings, and Wynn Macau. All of those companies submitted bids to renew their Macau permits.

Let the Genting Speculation Start

Under the terms of Macau’s updated gaming laws, the SAR will remain home to six holders of casino permits. But that’s not necessarily a guarantee of renewal for the aforementioned companies.

There’s some talk it could be Wynn Macau. But parent company Wynn Resorts (NASDAQ: WYNN) recently loaned the China unit $500 million. While there’s some chatter in the Macau media that Genting entering the fray could be a negative for Wynn, Bernstein doesn’t concur.

“We tend to disagree and would point to SJM [Holdings Ltd] as having the most issues,” according to the research firm.

Data confirms that of the six concessionaires, SJM’s survival timeline is the shortest, based on current cash burn rates and financing needs.

Genting China Ties

It’s possible Genting could enter Macau with a non-gaming hotel. But it remains to be seen how things shake out with the liquidation of Genting Hong Kong, which owns property in Macau, because the parent company reduced its stake in that ailing firm.

Still, the Malaysian conglomerate has favorable ties to China, including overseeing the development of a venue that was used when Beijing hosted the 2022 Winter Olympics.

Genting also has something Macau authorities crave: established success in operating non-gaming venues, which it accrued through its extensive portfolio of non-casino attractions at Resorts World Genting and Resorts World Sentosa in Singapore.