Genting SP - How low is low?
Debts...debts...and more debts....companies usually take more liabilities in hope for profitability margins in their expansions. Whether it is a Big cap or small cap (All) companies take on liabilities in promise of better prospect in the future and tap on shareholders'/debt holders wealth.Shareholders who invest in these companies got to be clear minded in one thing - Hope.
I happened to attend a fundamental analysis session conducted by a trainer today and he resurfaced about Olam's woes when Muddy's water attacked them. It is a fact then that Olam's had deep rooted problem cash flow problem but shareholders continue to ignore, even the analyst. If the company were a S-Chip other than Olam who is temasek backed, the scenario today might be different. I am not critical of Temasek but I can understand "ah gong" intention of helping.
I then thought of Genting Singapore, which has been the worst performer of our local stocks by fair in the last 3 weeks of trading sessions. As many of you will have know, Macquarie research recently came out with a sell call for GENSP @ $1.00 fair value sighting several reasons. On the macro surface - Declining tourists, strong sgd,regional competitions. On its micro surface, -Increasing accounts receivables to drive VIP segment volume which lead to returns being compromised as bad debts hurt chunks of their margins.
So where is GenSP share price heading now? In my opinion, it potentially has a very huge room to fall, similarly to how noble had fallen to 80 cents last year where very few had expected (other than donovan...lol). It has just broke its 3 year low and I do see more room for downside. Could we expect a similar bounce like what noble did? Probably yes but not anytime soon. Next support after $1.00 could be @ 85 cents thereabout.
At the very least, GenSP is now sitting on a huge pile of cash for any potential expansion. While the Korea expansion is already formalized but it does not seem attractive for any knee jerk reactions even. Meanwhile, the Japan's expansion could be a little more ideal and share price can react more strongly if they were to win any bids. Before that, Japan has to internally pass their promotion bill to legalize gaming in Nippon which should be concluded by year end 2014.
Other than expansion, GenSP could potentially do some forms of share buy back and start giving more dividends to shareholders to utlise their large cash position and instill confidence. While this might be unlikely but I will take special notice if they does!
I happened to attend a fundamental analysis session conducted by a trainer today and he resurfaced about Olam's woes when Muddy's water attacked them. It is a fact then that Olam's had deep rooted problem cash flow problem but shareholders continue to ignore, even the analyst. If the company were a S-Chip other than Olam who is temasek backed, the scenario today might be different. I am not critical of Temasek but I can understand "ah gong" intention of helping.
I then thought of Genting Singapore, which has been the worst performer of our local stocks by fair in the last 3 weeks of trading sessions. As many of you will have know, Macquarie research recently came out with a sell call for GENSP @ $1.00 fair value sighting several reasons. On the macro surface - Declining tourists, strong sgd,regional competitions. On its micro surface, -Increasing accounts receivables to drive VIP segment volume which lead to returns being compromised as bad debts hurt chunks of their margins.
So where is GenSP share price heading now? In my opinion, it potentially has a very huge room to fall, similarly to how noble had fallen to 80 cents last year where very few had expected (other than donovan...lol). It has just broke its 3 year low and I do see more room for downside. Could we expect a similar bounce like what noble did? Probably yes but not anytime soon. Next support after $1.00 could be @ 85 cents thereabout.
At the very least, GenSP is now sitting on a huge pile of cash for any potential expansion. While the Korea expansion is already formalized but it does not seem attractive for any knee jerk reactions even. Meanwhile, the Japan's expansion could be a little more ideal and share price can react more strongly if they were to win any bids. Before that, Japan has to internally pass their promotion bill to legalize gaming in Nippon which should be concluded by year end 2014.
Other than expansion, GenSP could potentially do some forms of share buy back and start giving more dividends to shareholders to utlise their large cash position and instill confidence. While this might be unlikely but I will take special notice if they does!
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