Excel – http://1drv.ms/11RHIXr
– Fair Value:
– 5Y DCF:
– Good Scenario: 14.16 (Fair value uncertainty: MEDIUM)
– Base Scenario: 13.04 (Fair value uncertainty: MEDIUM)
– Bad Scenario: 12.04 (Fair value uncertainty: MEDIUM)
– Ugly Scenario: 11.16 (Fair value uncertainty: HIGH)
– Absolute EY%:
– FY13 (EPS: 0.461) – Fair value 10.79 (Fair Value Uncertainty: HIGH)
– R4Q (EPS: 0.433) – Fair value 10.13 (Fair Value Uncertainty: HIGH)
– FY14 (EPS: 0.508) – Fair value 11.89 (Fair Value Uncertainty: MEDIUM)
– FY15 (EPS: 0.572) – Fair value 13.39 (Fair Value Uncertainty: MEDIUM)
– EPS applied to reach the current stock price (9.5): 0.406
– I assume that GENTING future growth will be mediocre, so I take Bad Scenario in DCF.
– In overall, fair value of GENTING range from 10.7 to 12, and the uncertainty is MEDIUM.
– GENTING, as a holding company, should have no problems financing its power division’s capex commitments of US$1bn. The annual cashflow of over RM530m from GENM’s management fees should be sufficient to meet the equity portion of the US$360m, spread over three years. However, if we consider the US$4bn capex for Resorts World Las Vegas (RWLV), the timing of the cashflow could be an issue as the RM7bn cash from the conversion of warrants will be spread out over the next five years. Apparently, work on RWLV will not start until it secures the necessary gaming licence. Analysts expect the licence to be obtained in the next 12-18 months. However, based on the building applications submitted by RWLV on 4 Dec 2013 as found on http://www.clackcountynv.gov, there appears to have been progress. This means construction could start as early as 3Q14.
– GENTING has many new projects on hand, but most of the projects are under development. Besides, it takes long time for GENTING to obtain casino license. And the risk is GENTING may not able to obtain license.
– Higher contributions is expected from RWG and GENUK where driven by normalising VIP win rate to offset lower contributions from GENS due to easing VIP volumes.
– CPO prices still low.
– As of now, I won’t add position to GENTING because there are many uncertainties at this moment.
Latest Financial – Q3 2014 Financial Report (21 Nov 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1801805
At the time of writing, I owned shares of GENTING.