23/2/07 (Business Times)   - GENTING Bhd, the world's fifth largest casino operator, may sell its 54.8 per cent subsidiary, Asiatic Development Bhd, as the group wants to fully focus on its global gaming business, industry sources said.

Interested parties could include Singapore-based Wilmar International Ltd, PPB Group Bhd or the state-owned Permodalan Nasional Bhd (PNB).

"Asiatic is Genting's cash cow but its revenue contribution is small compared to the entire group's earnings and the parent sees Asiatic as just another management unit," the source said.

Although crude palm oil prices could rise further, it could also put off potential buyers as the company could be more expensive.

"So it makes good business sense for Genting to drop Asiatic before crude palm oil prices, which are strong at the moment, climb even further," said the source.

Genting head of strategic investments and corporate affairs, Justin Leong, and a PNB spokesperson both declined comment.

"Asiatic, which employs some 7,000 workers, has been facing manpower issues over the past five years, and Genting should not sell at below RM20,000 per hectare," said the source.

The market rate for a plot of oil palm land depending on location is between RM20,000 (Peninsular Malaysia) and RM37,000 per ha (Sabah).

At RM20,000 per ha, the deal may cost over RM1 billion (Asiatic owns some 71,000ha).

As at yesterday, Asiatic has a market capitalisation of RM3.8 billion on Bursa Malaysia.

Its shares, which have been surging for the past three months, closed unchanged at RM5.10, its highest in 16 months with 1.5 million shares changing hands. Genting, meanwhile, fell 75 sen to RM39.25 sen a share.

Business Times, quoting sources, reported last week that Genting may consider selling its non-gaming operations.

Sources said the Genting management had asked bankers to prepare a proposal on how the sale could help it rebrand itself as a global gaming group.

"Wilmar may be interested to buy Asiatic to strengthen its presence in Peninsular Malaysia especially in Johor to complement refiner PGEO group owned by PPB Group," said the source.

Singapore-based Wilmar announced last year it is buying PPB Oil Palms and both companies will own a shade under 600,000ha of estates mainly in Sabah and Indonesia if combined.

Genting, meanwhile, announced plans to become a top three global gaming group, winning a 30-year gaming licence in Singapore and acquiring Britain's Stanley Leisure for US$1.2 billion.

However, a RHB group analyst said PNB may not be interested to buy as it has to deal with the Synergy Drive merger.

He said it is also unclear whether Asiatic's property business will also be sold enbloc to the same buyer or sold separately.

Asiatic, which is 21.88 per cent owned by Lembaga Tabung Angkatan Tentera, also has property projects measuring over 3,500ha in Malacca, Kedah and Johor.