For QE30/9/2012, GENM's net profit dropped by 62% q-o-q or 45% y-o-y to RM190 million while revenue dropped by 8% q-o-q or 16% y-o-y to RM1.94 billion. Net profit dropped q-o-q due to the following:
1. RWG's EBITDA dropped by RM35.4 million
2. UK Operations reported a loss before interest, tax, amortization & depreciation of RM13.8 million as compared to a EBOTDA of RM130.2 million oreviously
3. impairment losses totaling RM178.9 million, which came from goodwill written off for acquisition of Omni Center in Miami (RM87.5 million), provision for casino licences & assets in UK (RM647.5 million) and write-off the carrying value of casino concession agreement in Egypt booked in UK operation (RM26.9 million).
Table 1: GENM's last 8 quarterly results
Chart 1: GENM's last 18 quarterly results
Valuation
GENM (closed at RM3.50 at the end of the morning session) is now trading at a PE of 15 times (based on the last 4 quarters' EPS of 23.06 sen). At this multiple, GENM is deemed full valued.
Technical Outlook
GENM is still in a long-term uptrend line, SS with support at RM3.20.
Chart 2: GENM's weekly chart as at Nov 27, 2012 (Source: Tradesignum)
Conclusion
Based on poorer financial performance & full valuation, GENM's rating is downgraded to a HOLD.
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, GEMN.
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