Genting Intl

Requested by my dearest ET, she wanted to know about my analysis on Genting Intl, thus, this week featured Genting Intl.
Like always: A brief recap on the 8 criteria:
1)History of consistently increasing sales and earnings
2)Sustainable competitive advantage
3)Future Growth Drivers
4)Conservative Debt
5)ROE > 15%
6)Low capital expenditure required to maintain current operations (in account sector: CAPEX)
7)Good Management & Competent at capital allocation
8)Buy only when the stock is undervalued, i.e. Share price

I got Genting Intl's quarterly report from ET's link (from the tagboard), and went ahead to analyse its report:
1) There is a more than a 100% rise comparing quarters to quarters ( $4890 k to $ 67,550k)
2) EPS - Basic @ 1.2, Diluted @ 0.13
3) From calculations: ROI @ 2.5%
4) ROE @ 3.83%
5) Long term Liabilities increased by $87,760k
6) Short Term payables and borrowings decreased by $256,421k
7) Net cash generated increased from $3674k to $25,992k
8) Dispose 50% interest in Stanley Leisure
9) Gent Intl utilised its proceeds from their "First Convertible Bonds" as follows:
i) Cost of issuance ($6,003k), ii) Subscription of shares in Resorts World at Sentosa Pte. Ltd. via Star Eagle Holdings Limited ($407,062k) and left $11,935k unutilised
10) The proceeds from their 'Second Convertible Bonds' have not been utilised.
11) "... through its wholly owned subsidiary, Star Eagle Holdings Limited ("Star Eagle") increased its investment in RWS from S$27,187,500 to S$525,000,000.."


Currently, we can observe that Genting Intl is placing huge bet on the Integrated Resort in Sentosa. From their huge investment in RWS as well as their long term borrowings to fund this project. Plus, since they are now the sole controller of the IR project. Things may very well swayed to their favor. How successful will this IR project be in the future? Can it beat our neighbouring Macau? How would the response be in Singapore? These are unforseen circumstances in the future. But on a short note, if the company is so confident on this project, this enthusiasm will trickle down to its sharesholders.


Currently, the share price of Genting Intl is standing at 0.95. Using EPS method: the long term instrinsic value for Genting Intl is standing at $3.77




However, if were to use the discounted cash flow method, then the instrinsic value is at $0.78



Thus, this shows that Genting Intl does not have enough cash flow to operate its operation, but pointed out at point 10, their proceeds from the convertible bonds has not been utilised. This proceeds can serve as cash flow when they need. My future view on this stock at this point is still good.