Posted on: June 3, 2021, 11:22h.
Last updated on: June 3, 2021, 11:50h.
It’s been just two days since Genting Singapore and Melco Resorts & Entertainment (NASDAQ:MLCO) were revealed as the two operators advancing to Yokohama’s request for proposal (RFP) process. An investment bank is already saying the former has the inside track.
In a note out yesterday, Maybank Investment Bank says Genting can beat out its rival. The goal is to partner with Japan’s second-largest city in its proposal to win one of the country’s first three gaming licenses. That’s a more overt assessment than the one offered up by Nomura earlier this week, which said the Resorts World Sentosa operator has a 50 percent chance of emerging victorious in Yokohama.
Maybank says the odds favor Genting because the gaming operator is partnering with local firms Sega Sammy Holdings and Kajima Corp. on the integrated resort bid. Kajima was the main contractor for the aforementioned Singapore property. There’s another potential benefit in that partnership. Genting runs one of Singapore’s two gaming venues, while Sega Sammy has a minority interest in a South Korean integrated resorts. Japanese regulators have long said they want to work with gaming companies with established footprints in the Asia-Pacific region.
Melco is working with Japan-based Taisei Corporation, and Lawrence Ho’s outfit is one of the largest casino operators in the region, with properties in Macau and the Philippines, among other locations.
Not Surprising Call on Genting by Maybank
Maybank saying Genting is going to win the Yokohama competition isn’t surprising, simply because the bank already said the operator was the leading contender in the city. Those remarks were made about two weeks ago.
In our view, Genting Singapore scores better in promoting tourism, management and financial ability and responsible gambling initiatives relative to Melco,” said Maybank analysts in the new note.
In a report out last month, the bank said that if 2028 is the first full year of operation for the Yokohama integrated resort, it will generate $6.5 billion in gross gaming revenue and $1.9 billion in non-gaming sales.
That forecast is operator agnostic, but the research firm says that if Genting merely owns 50 percent of the Yokohama project, earnings would be boosted by $1.36 billion.
Melco Still Viable Contender
Maybank’s outlook on Genting in Yokohama is obviously bullish, and the operator clearly checks a lot of boxes for the city that are also likely to be appealing to federal regulators. However, that doesn’t mean Melco is simply going through the motions in Japan.
As noted above, Melco is an established player in the Asia-Pacific region and is partnering with a Japanese company — points that could work in its favor.
Like Genting, Ho’s company has also been committed to Yokohama even as rivals tired of bureaucratic delays and departed the process. Las Vegas Sands, Wynn Resorts, and most recently Galaxy Entertainment each withdrew from Yokohama competition, while Genting and Melco remain committed.