GenM reported its results for QE30/9/2009, where its net profit increased by 8.8% q-o-q or 5.4% y-o-y to RM359.5 million while turnover increased by 11.1% q-o-q or 9.1% y-o-y to RM1.336 billion.
Table 1: GenM's 8 quarterly results
Chart 1: GenM's 14 quarterly results
Financial Position
GenM is in a very healthy financial position as at 30/9/2009, with current ratio at an excessive 6.0 times and no bank borrowings. It has bank balances of RM3.098 billion, short-term investment of RM2.201 billion and available-for-sale financial assets of RM1.275 billion. If the short-term investment and available-for-sale financial assets can be realized, GenM would be sitting on a cash reserve of RM6.574 billion. This gives each GenM share a cash backing of RM1.11.
Valuation
Based on the annualized last 3 quarters' EPS of 22.5 sen & yesterday closing price of RM2.87, GenM has a PE of about 12.8 times. If the cash backing of RM1.11 per share is deducted from the closing price, then GenM's PE is only 7.8 times. That would make GenM the most attractively-valued large casino in this region.
Technical Outlook
As noted earlier, GenM has broken above its medium-term downtrend line at RM2.85. However, the stock failed to recruit sufficient following to launch into a rally.
Chart 2: GenM's weekly chart as at Nov 26, 2009_9.50am (Source: Quickcharts)
Conclusion
Based on continued good financial performance, attractive valuation and bullish technical breakout, GenM is a good stock for both long-term investment & short-term trading. Despite all the positives, the stock continued to disappoint investors.
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