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Friday, August 13, 2010

Genting Singapore Research Report Analysis PEGGY Method S$2.40

Genting Singapore (GENS G13) S$1.28
Genting Singapore fair value target price S$2.40
Genting Singapore Research Report Analysis PEGGY Method

Let us do my PEGGY method test:
PE: P/E ratio 14.9x, Dec 2010
G: Growth 17.4% per year. Jan 2011- Dec 2012
G: Gearing- Net gearing 26.9%, will drop to net cash in 2012
Y: Yield (Dividend). 0%
Figure I saw from the rhbresearch web
PE ratio is 14.9x. Quite high
The Growth is 17.4%, high, and can compensate the high PE
Gearing- Soon will drop to net cash, ok
Dividend yield- Zero
If you buy, what do you get?
High growth of 17.4% per year. But no dividend.
Assuming you bought at S$1.30 and price went to S$2.00 after two years.
You didn't sell. Suddenly license get suspended due to change of policy
or street protest, then price drop back to S$1.30, you get nothing.
Another risk is the casino license which has uncertainty.
Overall is ok, if you do not mind no dividend and the risk of license.
This counter also got a lot of trading activity, good for those who know how to buy low and sell high (not me, because I don't know).
My friend who is a remisier, said Malaysians who want to buy Singapore stocks, they don't know what stock to buy, so they normally buy Wilmar and Genting Singapore. So these two stocks will be pushed up by Malaysian Ringgit.
For info, the above RHB target price fair value is S$2.40

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