Travel in style between Las Vegas Convention Centre and Resorts World Las Vegas
Maintain BUY call and MYR5.96 SOP-based TP
Taking a break from TauRx Pharmaceuticals (Not Listed) related news, the underground tunnel connecting Resorts World Las Vegas (RWLV) with Las Vegas Convention Centre (LVCC) via Tesla cars dubbed the Vegas Loop opened on 30 Jun 2022 as we had flagged earlier (link). We expect the Vegas Loop to boost business at RWLV and aid in narrowing its losses markedly going forward. Our earnings estimates and MYR5.96 SOP-based TP are unchanged. Maintain BUY call on GENT.
Tunnel connecting RWLV with LVCC now open
RWLV is the first integrated resort (IR) on the Vegas Loop. Fares between LVCC Halls and RWLV are affordable at USD1.50 for a single ride or USD2.50 for a day pass. Hours of operations are from 7:30 a.m. to 9:00 p.m. which we view positively as it will bring visitors to RWLV during otherwise off peak hours. Judging from the time taken to construct the tunnel between RWLV and LVCC, we gather that RWLV could have a monopoly on incremental traffic from LVCC for at least a year.
Improvements are in the works
The drawback of the current tunnel between RWLV and LVCC is that limited numbers of Teslas can operate in it at any one time as the tunnel must be cleared of Teslas approaching from the opposite direction. That said, another 2 tunnels connecting RWLV and LVCC in a loop will be constructed. This will increase the number of Teslas that can operate in it. Construction of the Phase 2 tunnel is expected to commence soon. Construction of the Phase 3 tunnel has yet to be announced.
Maintain earnings estimates and valuation
To be sure, our RWLV estimates are unchanged. We continue to expect RWLV to be loss generating even with the Vegas Loop. Yet, we hope that the losses will narrow markedly by next year (i.e. c.USD215m in FY22E to c.USD100m in FY23E) thanks to the Vegas Loop. We continue to value RWLV at capitalised cost of USD4.3b (MYR17.8b) and maintain our GENT SOP-based TP of MYR5.96 based on 50% discount to SOP/shr. With >30% upside potential, we maintain our BUY call on GENT