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Hot stock: Genting down 8%, breaks through S$1 support, after dismal results

Wednesday, February 25, 2015 - 10:36
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Genting Singapore fell as much as 8 per cent to S$0.965 on Wednesday morning, after reporting dismal revenue and earnings the previous evening.

GENTING Singapore fell as much as 8 per cent to S$0.965 on Wednesday morning, after reporting dismal revenue and earnings the previous evening.

By 10.30am, more than 79 million shares had changed hands, making it the most active counter on the market.

"The stock has broken through its support of S$1 this morning to...a new four-year low. The next level of support for the stock remains at S$0.85, its low in 2010," noted Nicholas Teo, a CMC Markets analyst.

Genting's share price has slid roughly 23 per cent this past year, but it has in fact outperformed its Hong Kong-listed counterparts - Sands China, Melco Crown, Galaxy Entertainment and SJM Holdings - which have lost on average more than 40 per cent this past year, Mr Teo added.

Genting on Tuesday evening reported that its net profit fell 30 per cent to S$118.9 million, while revenue slipped 8 per cent to S$637.9 million in its latest quarter, a result that analysts called "disappointing".

This was mostly due to the casino operator's significantly below-average win percentage and VIP rolling volume, which affected its premium player business.

This, along with high impairments, also led it to miss Nomura's earnings forecast.

But Nomura analyst Tushar Mohata believes that Genting has priced in near-term market concerns such as a slowdown in Chinese players, slow growth in Singapore gross gaming revenue, and a possible deferral of Japan casino debate.

"We do not expect the share price to fall, as we believe management might resume its share buybacks. Since November, Genting has bought back 171 million shares, 1.4 per cent of total at levels between S$1 and S$1.10.

"One potential positive surprise might be an increased dividend payout. In case management sees little progress on the Japan casino legalisation debate by the end of the current Diet session in June, they are willing to explore a higher payout to pare down some of their cash balance which they have been conserving to invest in a potential Japan venture," he said.