Genting "GENT" (pronounced as https://www.youtube.com/watch?v=gF4sUlYTPh0, definitely not pronounced using the Queen’s English otherwise will sound like you need to use the Gent.) is a household name mainly known for their leisure themeparks, casinos, cruise, plantation, and property. To understand Genting, one would need to take a look at Genting Singapore (GENS), Genting Malaysia (GENM) and Genting Plantation (GENP).
You will find a lot of pictures and charts in this note. They say a picture tells a thousand words. Much easier to understand IMO.
For GENT the following 4 catalysts to drive the share price. Namely. 1) Turnaround in GENS, 2) The launch of Twenty Century Theme Park at Genting Highlands Malaysia, 3) TauRx, the potential blockbuster drug getting FDA approval. 4) GENP's leverage to CPO.
Catalyst 1. We expect GENS to turnaround. This following the recent 1Q results which saw GGR stabilizing as of 1Q16 while bad debt provision has stayed flat at 35%.
The share price of GENS has started to stabilized too. Earnings expectations already all time low!
If tourist arrival start to improve, the gaming and theme park of GENS will improve.
Catalyst 2. We move on to 52.9% owned GENM which operates the highland theme park. This was what it look like in the good old days of 90s.
Come 2017, the theme park should be ready and look like this...
That’s right folks. Twenty Century Fox is opening a theme park in partneship with Genting Highlands. This is part of Genting Integrated Tourism Plan (GITP). For GITP, GENM is spending a total MYR8.1 bn and 2.3bn in capex for phase 1 and 2 respectively. In the past, the local theme park is big ROIC generator.
As someone who hasn’t been to the highland for ages, I can’t hide the excitement. Haha.
The theme park is expected to be ready by end 2017. Management however has hinted July 2017 to the investment community. For the latest photos on their status, please refer to http://www.themeparx.com/20th-century-fox-world-malaysia/
20th Century Fox World Genting Theme Park Rides
• Rio
• Ice Age
• Titanic
• Life of Pi
• Planet of the Apes
• Alien vs. Predator
• Night at the Museum
As the theme park is being build as we speak, the financial numbers for GENM is of course not exciting. For 2016, GENM’s revenue will be driven by its UK business. The recent Brexit should not affect much on its UK operation. DB estimated about c1% decline in core profit for every 10% depeciation in the pound. UK assets comprises 19% of GENM of total assets in the form of casino property.
Similar to GENS, GENM’s earnings has already bottomed, how low can it go?
“History doesn't repeat itself but it often rhymes,” Mark Twain
The timeline on GENS from start construction to finish/opening of thempark and share price during the same period. I believe the same could happen for GENM.
Catalyst 3. TauRx may provide a blockbuster boost for Genting’s valuation. Its initial investment of MYR450m or USD150m could be worth RM15b if TauRx goes for IPO listing. This would add RM10.4b or 40% to the sum of parts of Genting.
TauRx, founded by Claude Wischik is involved in Alzeheimer research. Its biggest backers include Genting, Singapore Temasek and little known Dundee Corp.
http://www.thestar.com.my/business/business-news/2016/01/07/taurx-boost-for-genting/
http://www.bloomberg.com/news/articles/2016-03-17/a-30-year-quest-for-an-alzheimer-s-remedy-nears-the-finish-line
When the Star and bloomberg news reported about this drug. The investors reaction was bullish and share price of Genting soared from MYR7.00 to MYR9.90 in 3 months.
To follow TauRx. https://twitter.com/hashtag/TauRx?src=hash
The excitement in TauRx is clearly reflected in the share price of Dundee Corp which has rallied some 58% YTD. http://www.investing.com/equities/dundee-corp
The key date to watch will be around 27 July 2016 where the company will present results from its third phase of human trial on its experiemental Alzheimer’s drug known as LMTX.
Meanwhile, we can see insiders buying Genting.
http://www.bursamalaysia.com/market/listed-companies/company-announcements/5135433
DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) : DEALINGS OUTSIDE CLOSED PERIOD
| GENTING BERHAD |
| Type | Announcement | |||||||||||||||
| Subject | DEALINGS IN LISTED SECURITIES (CHAPTER 14 OF LISTING REQUIREMENTS) DEALINGS OUTSIDE CLOSED PERIOD | |||||||||||||||
| Description | Pursuant to Paragraph 14.09(a) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad, we set out below details of the dealings in the Company's securities by a Principal Officer. | |||||||||||||||
Name of Principal Officer : Tan Kong Han
Profile Mr. Kong Han Tan has been Deputy Chief Executive Officer of Genting Plantations Berhad since December 2010. Mr. Tan served as President and Chief Operating Officer of Genting Berhad. Mr. Tan served as the Group Chief Operating Officer of Tanjong PLC from March 2003 to June 2007. Mr. Tan has more than 13 years of working experience with an Investment Bank in Malaysia. He has been a Director of TauRx Pharmaceuticals Ltd., since November 20, 2012. He was called to the English Bar (Lincoln's Inn) in 1989 and the Malaysian Bar in 1990. He holds Bachelor of Arts degree in Economics and Law from Cambridge in 1988. | ||||||||||||||||
Catalyst 4. GENP is a company involved in crude palm oil (CPO) production. It has fairly young mature estates with good FFB and CPO volume growth. It also has a property development arm. It is leverage to CPO price movement.
GENP earnings and price has bottomed?
Valuations of GENT
So are you ready to place your bets?
Fyi Investors’ chips are already rolling into Genting.
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