Thursday, April 12, 2007


BS Galore!
Grow Up Fast

BS#1 - The share split of one 50-sen share into five 10-sen shares had made the counters more accessible to retail investors. In the past, its share price of around RM40 made it difficult for retail investors to buy into as a lot of 100 shares would cost RM 4,000. The surge in share prices was also liquidity driven as there were more shares in the market. The number of Genting shares became 3.69 billion while Resorts has 5.61 billion shares after the exercise.
How-da, people who never study will think like that, but if there are enough people who think like that, you get the silly price jumps in a stock split event. A stock split is a non-event, not a life changing, nor value-added, nor fundamentals improving, nor intelligent corporate strategy move. Brady-hell, if you cannot afford RM4,000 go play 4D-lah. Already Bursa accomodated by allowing 100 share lots, still not low enough, how about 10 share lots then?? Then can we stop the stupid stock splits!!! It makes me angry when shallow thinking dominates proceedings. Good for you if you make money on them, but the premise is just too shoddy, to say the least.

BS#2 - In terms of valuation, Resorts, which is a pure play in gaming and casino operations, is still trading at a lower price to earnings ratio (PER) of 21.7 times compared with other casino operators at other bourses at PER ranging from 25 times to 30 times. Genting is also cheaper as it was trading at 21 times, even though its current PE is above its historic 15 times. Singapore-listed while Genting International was trading at 87 times, Las Vegas Sands 71.4 times, MGM Mirage 33.3 times and Harrah Entertainment Inc. 30.48 times.
When people want to push stocks, silly diatribe like these gets circulated. Resorts is no Genting. RW is a hilltop casino with limited player growth (look at the road winding up to RW). The Sentosa thingee and Stanley Leisure are held elsewhere. RW has a 7% stake in Genting Int'l. Genting Bhd has a 57% stake in Genting Int'l. Genting Int'l holds 100% of Sentose IR, Maxim's Casino and Stanley Leisure. RW is half the PER of others because NO GROWTH, not because it is undervalued. RW is a dividend stock only with the biggest hotel in the world. That's all. Don't try to sell RW on comparative valuations, its shallow and uninformed.

BS#3 - The charade continues in the covered warrants. Genting-CD now trades at 13 sen. You still need 50 to convert into one share 50 x 0.13 = $6.50. Pay another $7.80 to convert = $14.30. Premium 14.30/9.15 = 56%. Gearing 9.15/6.50 = 1.4x. Isn't that the lowest gearing you can get on the bloody thing??? Oh, expiring in Sep 28. Watch this one implode. Current fair value 5-7 sen for the covered.
Enough already, people already think I have a vendetta against Genting or Resorts. Not true at all. Nothing is the mgmt's fault, its the market's naive investing behaviour which pisses me no end. We need to grow up... fast!

3 comments:

The Mumbling Priest said...

aiyoh, Dali, if you can't beat them , join them la. Seriously, do the retailers deserve to be helped? Like I said, many don't care.

About Genting & Resorts, they have no say whatsoever when or whether or in what form a CW is issued. But when the day of reckoning comes, I wonder whose names will be on the lips of the luckless retailers left holding the baby.

returntomean said...

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cin said...

"About Genting & Resorts, they have no say whatsoever when or whether or in what form a CW is issued. But when the day of reckoning comes, I wonder whose names will be on the lips of the luckless retailers left holding the baby."

Not luckless, just naive and greedy.