Genting- profit keeps rolling in

Results Update

Genting's net profit increased by 81% q-o-q or 255% y-o-y to RM824 million while turnover increased by 20% q-o-q or 57% y-o-y to RM4.889 billion. The improved bottom-line was attributable to higher earning from Resorts World in Sentosa which offset a lower earning from Resorts World Malaysia as well as higher earning from the Power division (due mainly to compensation from the Fujian provincial government in respect of an increase in tariff rate for the Meizhou Wan power plant).


Table: Genting's last 8 quarterly results



Chart 1: Genting's past 20 quarterly results

Valuation

Genting (closed at RM11.10 yesterday) is now trading at a PE of 14.7 times (based on last 4 quarters' EPS of 75.54 sen). Based on this multiple, Genting is deemed quite attractive. It certainly compared favorably to Las Vegas Sands which trades at a trailing PE of 53 times or a forward PE of 19 times (go here). One cannot compare Genting with MGM Resorts, which is a loss-making concern (go here).

Technical Outlook

Genting is in an uptrend line with support at RM10.80-10.90. Its upside may be capped by a medium-term downtrend line with resistance at RM11.72. If it can break above the downtrend line, Genting should continue with its prior uptrend.


Chart 2: Genting's daily chart as at May 27, 2011_10.30am (Source: Quickcharts)

Conclusion

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