Thursday, July 28, 2011

Singapore Equity: Genting Singapore PLC Technical View

# For over 20 years, Genting Singapore (GENS) has been at the forefront of gaming and integrated resort development in Australia, the Americas, Malaysia, the Philippines and the United Kingdom. Today, it is best known for its flagship project Resorts World Sentosa (RWS), a S$6.6bn development in Singapore that has changed the tourism landscape of Southeast Asia

# From 52-wk high of S$2.35 (9 Nov 2010), GENS tumbled to as low as S$1.75 (20 Jul 2011), tracking the fall in FSSTI and in anticipation of a slower 2QFY11 results (to be released in mid Aug) following a robust 1QFY11. The negative catalysts include concerns of lacklustre growth, high outstanding receivables, rising overheads and delay in start of the west zone.

# In addition, investors are still grappling with concerns such as: (1) regulatory risk – with regards to casino license and junket operators licenses and commission structure; (2) competition risk – in view of the liberalization of the Asian casino industry and revitalization of previously halted construction plans in Macau.

# However, it staged a strong rebound from the recent low of S$1.75 to close at S$1.93 yesterday in the wake of FSSTI recovery from July’s low of 3057 points (12 Jul). The positive vibes came from the better-than-expected Marina Bay Sands (MBS) results (a subsidiary of Las Vegas Sands) and Genting Bhd open-market purchase of 9.6m GENSP shares @ S$1.80/share, raising the former’s stake from 51.86% to 51.94%.

# Further re-rating catalysts are: (1) Rising tourist arrivals to Singapore; (2) Growing domestic and regional economies to sustain domestic consumerism and strong gaming momentum coupled with burgeoning VIP segment; (3) Robust commodity prices is positive for households in Johor and Indonesia; (4) Well placed to capture Asian gaming flows, due to: lower gaming tax in Singapore, iconic theme parks in the region, a supportive government and Singapore’s position as a gateway to ASEAN; and (5) The start of west zone will boost further tourist arrivals, with its two new hotels (30 floating villas and nearly 300 rooms) and news attractions such as a marine life park, water park, and wellness spa.

Further technical rebound with recent strong breakout and bullish indicators

# The bulls are gaining momentum following its recent strong breakout above the short term downtrend line (from May). Recent rebound lifted prices above the key SMAs of 10-d (1.82), 30-d (1.87) and 50-d (1.91).

# Technical landscape is also improving as RSI, +DMI and slow Stochastics indicators gaining strength, suggesting further upside ahead. The next upswing would likely push prices towards 200-d SMA near S$2.05. A breach above S$2.05 will drive prices higher towards downtrend line resistance (from Nov 10) at S$2.30.

# As long as the candles stay above its lower Bollinger band support near S$1.80, we think the bulls have the upper hand here.

# Trading Buy but stop loss below S$1.80.

GENS Daily Chart: Technical Rebound To Continue With Target Resistance At RM2.30 Following Recent Strong Breakout And Bullish Indicators
Genting Singapore PLC 29-07-2011

Source: HLIB Research

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