I'm believe that any further dip in resort stock price will present a buying opportunity so long it won't break down to its floor price of 2.20.
In volatile market, gaming sector rich in cash is king in times to turmoil. Its earnings visibility and relatively more resilient domestic casino operations are plus points for investments during uncertain times (patronage is largely made up of locals (80%). Resilient nature of Resorts' operations produces strong and steady net operating cash flow of RM1.45 billion a year. In addition, Resorts World's growing cash pile (RM4.6bil)as a competitive advantage in bidding for overseas casino projects.
However, dividends are not expected to be attractive as cash is conserved for expansion plans (payout ratio 20% or 6.5sen). But valuation-wise, Resorts World is one of the most undemanding casino companies in the world. FY08 EPS=23sen, PE=11x (lower end of historic range), if stripping net cash pershare of 77sen, Resort is just trading at PE of 8x. Valuation is undemanding judging from its captive, monopoly and recession proof gaming business.
With the resorts share price tumble and act like free-fall recently, value will emerge even more significantly, time is ripe for stock picking. It could be another example similar to IOI corp, where swing pattern is likely to repeat again.
2 comments:
hng, should not be much problem holding Resorts, this giant can opt for swing and longterm play.
I am queing my order for the 3rd round today.....
I'm believe that any further dip in resort stock price will present a buying opportunity so long it won't break down to its floor price of 2.20.
In volatile market, gaming sector rich in cash is king in times to turmoil. Its earnings visibility and relatively more resilient domestic casino operations are plus points for investments during uncertain times (patronage is largely made up of locals (80%). Resilient nature of Resorts' operations produces strong and steady net operating cash flow of RM1.45 billion a year. In addition, Resorts World's growing cash pile (RM4.6bil)as a competitive advantage in bidding for overseas casino projects.
However, dividends are not expected to be attractive as cash is conserved for expansion plans (payout ratio 20% or 6.5sen). But valuation-wise, Resorts World is one of the most undemanding casino companies in the world. FY08 EPS=23sen, PE=11x (lower end of historic range), if stripping net cash pershare of 77sen, Resort is just trading at PE of 8x. Valuation is undemanding judging from its captive, monopoly and recession proof gaming business.
With the resorts share price tumble and act like free-fall recently, value will emerge even more significantly, time is ripe for stock picking. It could be another example similar to IOI corp, where swing pattern is likely to repeat again.
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