Genting Shares Remain Resilient Amid Legal Drama
Genting Bhd’s shares bounced back after a substantial loss on Wednesday following a lawsuit by Wynn Resorts Ltd alleging that the former’s yet-to-open property in Las Vegas looks too similar to its own marquee properties.
Genting rose 1.16 per cent or seven sen to RM6.09, although some analysts felt that the stock would remain under pressure in the near term.
The gain reversed a 3.37 per cent or 21 sen loss at RM6.02 on Wednesday, making it one of the top losers on Bursa Malaysia.
Year-to-date, Genting shares have fallen more than 30 per cent from RM9.08.
The Genting group, which also counts Genting Malaysia Bhd as its listed entity, was hit by a slew of bad luck including Fox Entertainment Group LLC’s termination of a deal to develop a Twentieth Century Fox World theme park in Genting Highlands and hikes in casino duty and licence fee under 2019 Budget.
Wynn Resorts last Friday filed a lawsuit with the US District Court listing five counts namely copyright infringement, federal trade dress infringement, federal trademark dilution, state trademark dilution, unfair competition and false designation of origin.
Wynn Resorts’ biggest grouse was that Genting Group’s Resorts World Las Vegas (RWLV) was “confusingly similar” to its own casino and as such “would mislead the consuming public into falsely believing that it is affiliated with, sponsored by or associated with Wynn”.
RWLV is expected to be opened in late 2020.
TA Securities Holdings Bhd said the group was up for a negative surprise if its failed to defend the case.
“We reserve our comments on the litigation. However, we would like to highlight that Genting’s interest in Las Vegas started with this abandoned Echelon project from Boyd Gaming, where Genting bought over the site in 2013 for US$350 million,” TA Securities said in a report.
It is believed that Echelon’s foundations and partially built hotel towers as well as an unfinished parking garage on the property’s southwest corner, would be incorporated into the new project.
That said, TA Securities maintained its “buy” call for the group at RM8.80 per share despite the risk.
“We maintain our target price for Genting at RM8.80 per share, although the Genting group faces tremendous project risks emanating from termination of 20th Century Fox theme park and the infringement of Wynn’s copyrights, we believe the recent selldown was overdone. As such, we reiterate our ‘buy’ recommendation on Genting.”