Can't quite remember when I first bought Genting Singapore stocks. I remember subscribing for their rights so I must have owned it before 10 September 2009. And my records with my broker showed that I have traded the shares a couple of times in 2011 and 2013 and seemed to have made some decent profits.
The hokkien has a saying "blind chicken peck the worms". I must have been a blind chicken from 2011 to 2013. My records showed that I was quite a trader then and actually did pretty okay!
It could be age (getting older) or simply because now that I do not have a fixed regular income to offset any trading loss, I have become a lot more risk adverse. Hence I was quite surprised to see my trading history! The more I think about it, the more I believe this is a result of not having a fixed income from a job. Sigh. I have learned a hard lesson in that, maybe someday I will write a post on how it is important to appreciate a good paying job and just ignore whatever politics or negativities there are around you. I have come to learn you can't leave idealism and dreams without having a thick cushion of financial security.
Anyway back to Genting, I remembered I was looking at Genting Sing at around 2016. I hadn't looked at my portfolio since 2013 I think. Somehow got side-tracked by life (moving and kids). So I was looking at it and feeling sad that it has dropped from $1.4+ to around $0.70. Then on 4 November 2016, I was sitting there and seeing that Genting suddenly surged from $0.80 to $0.85 on high volume. I had the feeling something was going on but was too scared. What if it was a pump and dump trap.
I was thinking maybe can get a couple of shares then my sister told me she was selling hers. I got stopped in my tracks.... and decided maybe it is too risky and decided to do nothing. And of course, it just kept going up and up from there. Even though I myself told my sister "huh, why you sell... it is starting to move up lei". Yet, I couldn't believe in my own words :(
So this week, as I decided to be more serious and disciplined with my investments (no more blind chicken I am going to be), I decided to do a look back on Genting and hopefully figure out clues to help me not miss out such break outs in future.
In 3QSEP 2016 (announced in Nov 2016), the EPS recovered to 0.89cents after various quarters of loss.
The key risk is the continued decline of revenue at Genting Sing. Although their cost efficiency have paid off as they managed to squeeze higher profits from less revenue. So the growth prospects for Genting Sing seems quite limited.
Although I have been using EPS here mostly, the traditional valuation metric for casinos is to use EV/EBITDA. So during the lowest price of $0.75 and $0.78, the EV/EBITDA for Genting Singapore was between 6.22 and 7.07, which is undervalued compared to the average of 10x-12x.
The hokkien has a saying "blind chicken peck the worms". I must have been a blind chicken from 2011 to 2013. My records showed that I was quite a trader then and actually did pretty okay!
It could be age (getting older) or simply because now that I do not have a fixed regular income to offset any trading loss, I have become a lot more risk adverse. Hence I was quite surprised to see my trading history! The more I think about it, the more I believe this is a result of not having a fixed income from a job. Sigh. I have learned a hard lesson in that, maybe someday I will write a post on how it is important to appreciate a good paying job and just ignore whatever politics or negativities there are around you. I have come to learn you can't leave idealism and dreams without having a thick cushion of financial security.
Anyway back to Genting, I remembered I was looking at Genting Sing at around 2016. I hadn't looked at my portfolio since 2013 I think. Somehow got side-tracked by life (moving and kids). So I was looking at it and feeling sad that it has dropped from $1.4+ to around $0.70. Then on 4 November 2016, I was sitting there and seeing that Genting suddenly surged from $0.80 to $0.85 on high volume. I had the feeling something was going on but was too scared. What if it was a pump and dump trap.
I was thinking maybe can get a couple of shares then my sister told me she was selling hers. I got stopped in my tracks.... and decided maybe it is too risky and decided to do nothing. And of course, it just kept going up and up from there. Even though I myself told my sister "huh, why you sell... it is starting to move up lei". Yet, I couldn't believe in my own words :(
So this week, as I decided to be more serious and disciplined with my investments (no more blind chicken I am going to be), I decided to do a look back on Genting and hopefully figure out clues to help me not miss out such break outs in future.
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| History of events and price movements. |
So as you can see, the stock was basing for 14 months from mid 2015 until end of 2016. The stocks finally broke out when Genting announced positive EPS showing that their efforts to cut cost and deal with the bad debts were paying off.
In 3QSEP 2016 (announced in Nov 2016), the EPS recovered to 0.89cents after various quarters of loss.
The key risk is the continued decline of revenue at Genting Sing. Although their cost efficiency have paid off as they managed to squeeze higher profits from less revenue. So the growth prospects for Genting Sing seems quite limited.
Although I have been using EPS here mostly, the traditional valuation metric for casinos is to use EV/EBITDA. So during the lowest price of $0.75 and $0.78, the EV/EBITDA for Genting Singapore was between 6.22 and 7.07, which is undervalued compared to the average of 10x-12x.
I need to update my figures for FY2017, but I do believe the price of $1.12 is approximately 9-10x EV/EBITDA. Analysts are expecting Genting to trade closer to 12x EV/EBITDA at around $1.45.
Hopefully, there will be good results for 1Q2018 (which will be announced sometime around May 2018). Given the enbloc boom, Singapore might be feeling rich and generally good economic sentiments in Asia, there might be catalysts for better results (but of course this is all speculations).
On the other hand, as long as Genting is able to generate revenue / earnings at this level consistently, price level should be safe at $1.00 and above. If price drop below $1.00, I would need to see if there were any change in the fundamentals or is it an opportunity to add more.
Afterall, the next big catalyst is getting the casino license in Japan. If they do not get the license, I would hope to get out at around $1.40.
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