Friday, December 7, 2012

Selling Genting for other opportunities

Genting has always been a stock which I was not going to hold for long. It went to as low as RM8.50 for the last few months, but I bought the stock at RM8.92. It is a good stock with very good cashflow over the coming next few years, but its business has sort being challenged recently. The Singapore together with the Malaysian business somehow or rather are tapering down both from the perspective of volume (revenue) as well as margin.

I guess the strong Singapore effect is slowing down. The government of Singapore if you notice is very comfortable with the current situation and at the same time trying to discourage its own citizens to frequent the casinos. This does not augur well for Genting relying much more from its casino business rather than hospitality and theme park business for profits. Genting's gaming and convention businesses in UK and US seem to have slow pick-up rate - probably due to the management's over confidence on its success hence going in big into this area of business. It seems to be getting tougher due to the increasing competition and with many countries now planning to have casinos in their own countries.

At the same time, Genting's other businesses in plantation and power plant are facing some sort of slowdown recently - the first due to the poor palm oil prices while it is selling its power plant business in Malaysia. Power plants are businesses which provide consistent much calculated revenue but it is not exciting if you want strong growth.

With this, I feel that there could be better opportunities from elsewhere. I have hence decided to sell Genting at RM9.17, making a small gain.

Over the last few months, it is getting tougher to pick stocks due to the market getting expensive. From the list of stocks which I have picked, some are doing well while others are facing selling pressure from very large funds.

Position as at 7 Dec 2012
2 of the stocks I hold - Airasia and NTPM are facing selling pressure from large local funds if you notice - Airasia from EPF with this largest fund in Malaysia selling few million shares a day. I have noticed that Tony Fernandez and his partner have been buying but their buying would not be able to provide support to the large volume selling by EPF.

NTPM similarly is being sold by Tabung Haji to the extent that now the fund is holding less than 5% of its stock. I believe that TH is still selling despite it not needing to report the transactions. If large funds are selling, there is no point supporting the stock. Let them sell as fundamentals remain the same while share price is the only one that changes. The lower the share price, the more opportunities it presents for future buying.

Anyway, the small fund that I present here continues to hold on with my latest purchase Padini springing a surprise in a short period from my purchase on 29 Nov 2012. If you notice, the shares that I hold in this portfolio have very good dividend payment track record except for maybe Airasia and TimeDotcom. I like companies with good cashflow and confidently provide good dividends from its cashflow. However, do not buy overly expensive companies though despite the high dividends. There are some which are providing high dividends but are expensive.

On another note, if you notice today's evening announcement, Time Dotcom is proposing for dividend in specie of Digi's shares it holds. It is proposing to distribute 6 shares of Digi for every 25 shares in TimeDotcom held. By doing this, TdC is freeing up and untangling the Digi shares it held for its shareholders, a commendable move. I expect upside for the share on Monday.


PureBULL said...
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Malaysian Harvester said...

Hi, I am your 'loyal' reader and I love your blog. In this article, you mention that the transaction of TH is not disclosed. Can I know the rationale behind? And how can I see the movement of TH in future if it does not disclose the transaction? Many thanks.

felicity said...

Hi Unknown, Anyone who owns less than 5% does not need to announce to the Bursa

Yau said...

Hi Felicity, I am thinking of buying YTL or YTL Power for long term. Which is a better buy? Aprreciate your comments. Many thanks.

felicity said...

Hi Yau

It all depends, YTL includes construction and construction related (cement) stocks but YTL Power is more utilities. Today, YTL Power is more of a foreign exposure than Malaysia alone. Looking forward, there are element of uncertainties as the IPP contracts are due for renegotiation in 2 years time. The new one if they are still getting renewal will not be the same anymore. Will be very surprise if it is.

Having said that, YTL Power looks cheap today but until the IPP contracts are sorted out, it would remain to be cheap.

I have a feeling, YTL (both companies) will not be traded upward (more sideways) over the medium term. Next 1 year.

Bn911 said...

Hi Felicity, how u think abt airasia currently, wil u buying more or wait for price to come down again ? Thx a lot.

felicity said...

I think I'll see how far EPF will sell down to. Notice that the management has stopped supporting