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| Araya Hargate |
Trading/Service: Genting Berhad
Results from annual report 2010 is impressive as expected. Previous DCF target price of RM12.25 is now revised to RM14.05 backed by encouraging outlook of the tourism-related sectors in Singapore. With the global economy in an almost stalemate climate, SG's 2Q11 economic indicator shows a yoy% increase of 3.3% for the services sector while the rest draw blanks (manufacturing @ -5.5% and construction @ 1.6%). Although the services sector has been in the downtrend since 2Q'10, tourism was not the cause of it. Wholesale and retail trade were weaken by trade flows while financial services sectors lag due to sluggish stock activities. Nothing beats the source from the ground and with many Malaysians situated in SG, many of my friends can attest that tourism is a booming industry in SG. Other source: MIDF Equity Beat.
As usual I'm ignoring other segmental info of GENTING (power, plantation, O&G and properties) because it is negligible; contributing only 18% of revenue though I do wish they exit from power generation. This is because the prices of raw materials for power generation such as coal is increasingly volatile and will be as the world struggle more with its power needs. GENTING remains my most favourite long-term (>5 years) pick and is a 5-star choice and SOLID BUY. The biggest risk I see is over expansion which leads to either too much debts OR losing focus; for now this is still in the region of being medium. And I have yet to visit Resorts World Sentosa, I plan to do so one day.
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| GENTING Chart 1 |
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| GENTING Chart 2 |
Trading/Services: Parkson Holdings Bhd
Parkson added 3 stores in China, 2 in Malaysia and 1 more in Vietnam. Because Parkson China remains the main contributor to the Group's result (71% of revenue & 91% of OP) I tend to overlook Malaysia (which does not have good long term economic outlook) and meager Vietnam due to this. Retail spending has increased 15% over the year, with GDP @ 10% and Parkson China registered store sales growth of 11%, I am optimistic and convinced that Parkson has a grip and strong presence in China's Tier 1 cities. Unlike MAMEE which made a mistake of going into China all by themselves, PARKSON went by proxy just like JOBST which is proving successful. Other healthy indicator includes another year of down trending D/E ratio; evident with rising ROCE.
This time I removed gains on partial disposal of subsidiary for Parkson China; the chart shows it all. Revenue growth rate is expected to balance itself between 5% to 10% as you remembered in my previous analysis that Parkson turned pure retail in 2007. PARKSON is another good pick for the long-term (>5 years) as China's middle class is expanding tremendously and has been for the pass decade. A 4-star choice and GOOD BUY. The risk I see would be the bubbling of China property market; if it goes boom it could spell lacklustre consumer spending like we see in the US. A medium to high risk region. Pay attention to the AR 2011 since they end their financial year in June. As such I have revised DCF target price from RM6.60 to RM6.80. Sources: Forbes & World Bank.
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| PARKSON Chart 1 |
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| PARKSON Chart 2 |
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| Deborah Henry |
2 comments:
Hi Nick,
Acc to Genting Bhd Annual report year 2010, EPS was 59 sen. Your graph shows 80 sen. Why the huge difference?
It was weighted across a decade of data hence you get a graph that is comparable instead of skewed if the number of outstanding shares differ each year. In some cases the no.of share might not change for the last 10 years and you will get the same EPS number as in the annual report.
Refer to Stock Performance Guide book by http://www.dynaquest.com.my/spg.html. This is where I do my homework fast and easy @ the cost of RM70 =)
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