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Thursday, February 18, 2016

Genting: Positve technical signs

Market Observation

Over the past 3 weeks, we have seen a marked increase in the trading volume for Genting-WA which coincided with the warrant trading above its horizontal resistance at RM1.00. Genting-WA - convertible at RM7.96 on a 1-for-1 basis & expiring on 18/12/2018 - has a slight premium of about 11%.


Chart 1: Genting-WA's weekly chart as at Feb 18, 2016_3.00pm  (Source: ShareInvestor)
 
Technical Outlook

Genting recovered after it had tested its long-term uptrend line at RM6.50-6.70 in August last year. Is this the beginning of its next upleg or a technical rebounce?


Chart 2:Genting's monthly chart as at Feb 18, 2016_3.00pm  (Source: ShareInvestor)

Looking at the weekly chart, we can see that Genting has broken to the upside of its ascending triangle at RM8.00. The weekly MACD, which had crossed above its signal line, is poised to go above the zero line. When that happens, Genting's upleg will begin in earnest.


Chart 3:Genting's weekly chart as at Feb 18, 2016_3.00pm  (Source: ShareInvestor)

Result Update

Genting's top-line has been fairly stagnant at about RM4-5 billion a quarter for the past 4 years. At the same time, its bottom-line has been drifting lower due to slipping profit margins.


Table: Genting's last 8 quarterly results


Chart 1: Genting's last 38 quarterly results

Valuation

Genting (at RM8.17 as at 4.35pm) is trading at a PE of 19  times (based on its last 4 quarters' EPS of 42 sen). At this PER, Genting is deemed fully valued.

Conclusion

Despite the unimpressive financial performance & demanding valuation, Genting could be a good stock to trading purpose due to the developing positive technical outlook. 

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.

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