PETALING JAYA: TA Securities, which maintained a positive outlook on Genting Bhd, said it would be a big negative surprise to the market if the group fails to defend itself in the latest US$4 billion (RM16.7 billion) copyrights infringement lawsuit slapped against it.
“If Genting fails in defending this case, it will be a big negative surprise to the market as it is hard to imagine that all project designers and consultants involved in the project failed to identify the possible trademark infringement,” it said in a research note today.
Nonetheless, TA Securities believes that the recent sell-off in Genting shares on the back of the risk emanating from the termination of the 20th Century Fox theme park and the infringement of copyright of the Wynn Resorts Holdings buildings was overdone.
On that note, it is maintaining a “buy” call on Genting with a target price of RM8.80.
To recap, Wynn Resorts, which owns the Wynn and Encore Resorts in Las Vegas, Nevada in the US, has filed a US$4 billion lawsuit against Resorts World Las Vegas (RWLV), which is accused of copying Wynn’s building design for the casino that it is building just across the road.
Wynn claimed that RWLV wants to mislead the public into believing its new 3,000-room project is affiliated with Wynn.
“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. 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,” said TA Securities.
Phase one of RWLV is expected to commence by end of 2020. However, if the court granted the injunction to Wynn, this project would likely be delayed.
TA Securities has not changed its earnings forecasts for Genting pending the final outcome of the litigation. Based on its projections, the group is expected to record a net profit of RM1.32billion, RM1.97billion and RM2.23 billion for FY18, FY19 and FY20 respectively.
Source: The Sun Daily