Why You Should Investing Genting Stock – Perception Game

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Apr 11 2007
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You seldom see stock-split which garner the huge attention both Genting Berhad (KLSE: GENTING, stock-code 3182) and Resorts World (KLSE: RESORTS, stock-code 4715) is enjoying now. Both stocks’ price surged in heavy trading after their one-into-five share-split.

Genting’s share price rose as high as RM9.95 in early trade, which was RM1.10 or 12.4% above the reference price of RM8.85. It closed at RM9.25, up 40 sen with 11.55 million shares traded. Resorts rose to a high of RM4.06, up 12.15% or 44 sen from its reference price of RM3.62. It ended the day at RM3.80, up 18 sen with 17.99 million shares done.

The call warrants of Genting and Resorts also closed higher. Genting-CA closed four sen higher to 41 sen, Genting-CB 4.5 sen to 24.5 sen, Genting-CC five sen to 21 sen and Genting-CD six sen to 13.5 sen. Resorts-CA gained seven sen to 40.5 sen while Resorts-CB increased five sen to 19 sen

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.

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 (SIN:G13) was trading at 87 times, Las Vegas Sands (NYSE: LVS, stock) 71.4 times, MGM Mirage (NYSE: MGM, stock) 33.3 times and Harrah Entertainment Inc. (NYSE: HET, stock) 30.48 times.

Since the perception of the majority is that Genting and Resort stock is more “affordable”, the stocks are expected to see continue buying. Accept the fact that there’re not many good fundamental stocks with good business with excellent management plus a proven model which can generate good return for investors in Malaysia. So for those who’re looking for stocks as their investment tool, both stocks especially Genting will be their ultimate choice.

# TIP: Investing Genting in stages for a better average price if you’re looking for long-term investment of which the stock has global exposure.

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