Saturday, January 6, 2007

Value Investment on Singapore Stock Exchange - Valuation Report of Genting International PLC

Value Investment on Singapore Stock Exchange - Valuation Report of Genting International PLC

Evaluated on 06-Jan-2007 and I am currently not invested in this company.

About the company:

  1. Core Business: Operating Integrated Resorts (including casinos, of course)
  2. Date of Listing: Dec-2005
  3. What I like about this company: Firstly, it is cash-rich with little outstanding debt, imaginable I guess, since it is running casino operations. It has got diversified operations in Europe, Asia Pacific and Malaysia.
  4. What I do not like about this company: Since it was only listed in Dec-2005, the simulated EPS over last 5 years has been increasing from $0.002 to $0.006 (minus once-off type of gains). Also, there was a recorded once-off investment gain of 82.5mil in 3Q05 and an investment lost of 27.6mil in 3Q06. Personally, I do not like the volatility.
  5. Competitive advantage (if any): Well, being only 1 of the 2 casino operators in Singapore, do you consider it to be a competitive advantage? Development of the Marina IR is set to begin in 2007 and end in 2009. The IR is targeted to start operation in 2010.

Valuation Statistics

  1. Earning Per Share: $0.004 (projected, base on Sep-06 financial report)
  2. PE ratio : 210.2
  3. Operating Profit: 0.208%
  4. Return on Equity Ratio: 1.36
  5. Current Ratio: 10.124
  6. Debt/Total Equity Ratio: 0.052
  7. Net Tangible Assets: $0.241

Conclusion

  1. Price: $0.925 (05-Jan-07)
  2. Intrinsic Value: $0.26 (highly subjective)
  3. Price to IV: 352%
  4. Final word: At a 352% price to IV ratio, I would not consider it

Information sources

  1. Genting International company website at http://www.gentinginternational.com/
  2. Share investment magazine, issue 296, 01/01/07 - 12/01/07

Disclaimer: Completeness, accuracy and opinions based on information and comments mentioned via this website cannot be guaranteed. Investors should always conduct their own research before making investment decisions.

3 comments:

weihan said...

Well Fu Chin.

Though i may not be a pretty good value investor. My take on this company is that it has a good business model.

It has the monopoly.
It is also in the ever-profitting business, just like Singapore Pools. As no matter wat, people will nv stop betting and buying toto.


But how strong is the management and do the management feel the responsibility and integrity towards the shareholeders?

That bears certain reviewing.

But my guess is this company is worth further researching and reviewing as it has really really high potential.

Pls advice on my comments.

Fu Chin said...

Hi Wei Han,

Good morning and thanks for sharing your views.

I do agree with most of your points, especially that it is a monopoly and the historical statistics show that the banker wins most of the time. ;)

As a personal preference, I do not like to 'bet' (sorry for the pun) on potential of the business. I rather much pay less for what I feel the business is worth.

As at point, I do not intend to keep track of this business, unless there are other compelling reasons to do so.

Apologies that I am not going to do further research for this business, until there are further major developments.

Have fun investing! :)

Warm regards,
Fu Chin
Value Investment Blog:
URL: www.valueinvestmentonsgx.blogspot.com

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