Readers may recall my numerous positive posts on GenM (an example here) but this stock has disappointed many. It even lagged behind its younger "siblings" such as Genting SP & Genting HK (see this post).
At one stage, GenM sat a cash pile of more than RM6 billion & many analysts & investors were hoping that GenM would declare a bumper dividend or capital repayment but alas none was forth coming. Instead of rewarding its shareholders with cash handouts, GenM has begun to invest the funds in casino ventures, starting with the acquisition of the Genting group's casino interest in UK (here) & then venturing into a racino business in New York (here). The above announcement confirms the trend of more future casino ventures to come for GenM. This news flow- some positive, some not so- could stir up interest in this much-neglected stock.
From the chart below, we can see that GenM (closed at RM3.29 yesterday) is resting on its medium-term uptrend line at RM3.30. Its overhead downtrend line resistance is at RM3.45. It is relatively safe to take a position in GenM at the uptrend line. If the stock can break above the RM3.45 level, it could be a trading BUY.
Chart: GenM's daily chart as at Dec 21, 2010 (Source: Quickcharts)
For those with a more aggressive appetite, you may try GenM-JA or GenM-CL. The former is like a Callable Bull Certificate (or 'CBLC'), which is very similar to a Call Warrant (or 'CW') except it has the added feature of having a Mandatory Call Event ('MCE') which automatically forces the issuer to recall the CBLC when it hit a Minimum Trading Price ('MTP') (for more, go here). At a premium of 3%, GenM-CL is the cheapest structured instrument but it has a relatively short lifespan of about 2 months. Gen-JA has a longer lifespan than GenM-CO as well as trading at a premium of half that of GenM-CO. My preference is for GenM-JA.
Table: GenM's CWs & CBLC valuation & terms