For QE31/12/2012, Genting's net profit rose nearly 8-fold q-o-q or more than 2-fold y-o-y to RM2.48 billion due to the exception gain of RM1.89 billion from the sale of the Kuala Langat power plant in October 2012. Pre-tax profit was however mixed- rose 68% q-o-q but dropped 22% y-o-y to RM1.35 billion. Revenue was similar mixed- rose 7% q-o-q but declined 7% y-o-y to RM4.49 billion.
Pre-tax profit dropped q-o-q due to poorer results from the leisure and hospitality division, such as decline in contribution from RWS due to lower win percentage in the premium player business and RWG due to higher payroll costs and promotional expenses. In addition, the UK operations incurred a loss due to overall lower volume of business and lower hold percentage of its London casino operations as well as higher bad debts written off.
Table: Genting's last 8 quarterly results
Chart 1: Genting's last 27quarterly results
Valuation
Genting (at RM10.00 as at 10.30am this morning) is trading at a PE of 17.5 times its adjusted full-year EPS of 57 sen (after excluding the exceptional gain from the sale of the Kuala Langat power plant). At this PE, Genting is deemed fully valued.
Technical Outlook
From Chart 2 below, Genting tested the resistance of RM9.90 posed by the line connecting its recent high. With Genting currently at RM10.00, the stock has achieved an upside breakout that could signal the start of its recovery. If the stock can just stay above the RM10 mark, the previous bearish outlook for Genting (here) would have to be revised.
Chart 2: Genting's daily chart as at Mar 5, 2013 (Source: Tradesignum)
Chart 3: Genting's monthly chart as at Mar 5, 2013 (Source: Tradesignum)
Conclusion
Despite the challenging environment (with rampant proliferation of casinos everywhere), poorer financial results and demanding valuation, Genting is a stock for those with longer time horizon. Its technical outlook has improved and that may warrant a change in the rating for the stock from bearish to neutral. Further upgrade would depend on better financial performance and share price performance.
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, Genting.
3 comments:
Good morning,Alex.Could you comment on PRKCORP(8346)?Financially looks sound with nearly half of it's share price supported by cash and high NTA.A net dividend of of 7.48 sen is also in the offering.What is your take on it,technically?
Thanks in advance for spending time on it.
Hi newbie
PRKCORP(8346) is a fairly attractive stock. Its main business is township development & port ownership & operation.
It develops Bandar Meru Raya, which still has 140+ acres of undeveloped land. It owns Lumut Maritime Terminal is a river port terminal that handles vessels up to 40,000 DWT. It manages Lekir Bulk Terminal, a deep water seaport that handles dry bulk cargoes in ships up to 200,000 DWT.
Its EPS for FY2012 was 38 sen, giving it a PE of 3.7 times (based on current price of RM1.40). It has net cash of RM77 million or 77 sen per share. As noted by you, it has raised its dividend to 7.48 sen. Last year dividend was 3 sen and the year before was 2.5 sen.
Technical speaking, a breakout above RM1.40-1.45 could see the stock testing its previous high of RM1.70.
Good morning,Alex.Thanks for the information.Appreciate your effort.Thanks again.
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