Thursday, August 30, 2012

GENM- bottom-line jumped

Results Update

For QE30/6/2012, GenM's net profit increased by 83% q-o-q or 58% y-o-y to RM496 million while its revenue increased by 11% q-o-q or 12% y-o-y to RM2.12 billion. The improvement was attributed to increased earning from its Malaysian, UK & US operations.


Table 1: GenM's last 8 quarterly results


Chart 1: GenM's last 25 quarterly results

Valuation

GenM (closed at RM3.30 yesterday) is now trading at a PE of 13 times (based on last 4 quarters' EPS of 25.8 sen). If GenM can maintain the same level of earning as the quarter under review for the next 4 quarters, its forward EPS would be 35 sen. This would give a forward PE of 9 times. I believe the PE of this stock lies in between 9 & 13 times, which is quite attractive.

The negative for this stock is its stingy dividend payout policy & the setback in obtaining casino licenses in New York & Florida. If there is a change in any of these negative factors, the share price could rally higher. One positive spot that has yet to be fully factored into the share price is the return of Singaporeans to Resort World in Genting Highland. Due to the stiff fee of S$100 levied on any Singaporean visiting the Singapore casinos, some of these players have returned to the Malaysian casino where S$100 could be used as capital for their next roll of the dice rather than for paying the door fee!!

Technical Outlook

GenM is now resting on its intemediate uptrend line support at RM3.30. This is also the strong horizontal support for the stock.


Chart 2: GenM's weekly chart as at Aug 29, 2012 (Source: Quickcharts)

Conclusion

Based on good financial performance, attractive valuation & positive technical outlook, GenM is definitely a good stock to consider for long-term investment.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, GenM.

3 comments:

Jimmy Yeoh said...

Hi Alex,

Can you comment on EVERGRN?

Thanks.

Alex Lu said...

Hi Jimmy Yeoh

EVERGRN broke its strong horizontal support at RM0.85. It is now struggling to hold onto the horizontal support of RM0.68-0.70. If it failed to do so, it may revisit the 2009 low of RM0.44.

Evergreen recently reported a net profit of RM32 mil on revenue of RM549 mil for 1H2012. This compared favorably to the results for 1H2011 where its net profit was 18 mil while revenue was 486 mil.

If the stock can hold at the current level of RM0.68-0.70, this could be a good entry level to this stock. If you choose to accumulate now, do so slowly.

Spontaneous said...

Hi Alex,

You were saying Genm is a good stock to hold for long term investment, can i check with you how about the mother's company Genting Berhad? It seems that everyone is throwing Genting Berhad shares and buy GenM shares. Any comments?