Looks like another controversy for Genting Group.
Its cash cow Genting Malaysia Berhad (previously Resorts World) saw almost RM1 billion wiped off its market value today as it announced the proposed acquisition of Genting Singapore PLC’s UK casino businesses for RM340 million. When will all the inter company and related party type transactions ever end?
GENM is currently trading at RM2.58, down 16 sen from perviously close. This is a current PE of 11.2x or EV / EBIT of only 5.7x which is very low for a big cap market leader.
At last count, Genting’s golden goose had net cash of RM5.3 billion, the largest net cash pile for any company on Bursa Malaysia. As at 31/12/09, GENM had Retained Earnings of RM8.4 billion but pays out a paltry RM400 million or so in dividends each year. What it intends to do with all that cash is anyone’s guess. For now and sadly for the investment community, it looks like inter-company acquisitions is the way to go.
It doesn’t take much imagination to add Shareholder Value in this company. We would recommend upping the annual dividends for a start. But then again, where would the rest of the Genting Group be without this golden goose?
Tags: bursa malaysia casino gaming companies, genm, genting malaysia