Why I Like Genting Malaysia & Genting Berhad (pls stop laughing)

One must be able to separate an issue from the overall scope of things. Many readers would assume that I have an axe to grind with the Genting group - well, no is the answer. Yes, I have issues about their board's independence, but business fundamentals are another thing.

You would have noticed that since my recommendation of CIMB (@ 10.30), I have not touched on any large caps for the longest time. My rationale is simple, without sufficient liquidity the large caps will find it hard to move. Why then the need to look at Genting Malaysia and Genting Berhad?

Pick up any research report and their target price for both counters are at least 20% above their current prices. Yes, they have been recommending buys on both for the longest time. Opportunity cost people, opportunity cost. Call it a timing strategy, but the bones in me indicate that both counters are likely to outperform over the next 3-6 months substantially.

Genting Malaysia
Ticker: GENM MK
Shares Issued (m): 5,904.4
Market Cap (RM m): 16,768.4
Major Shareholder
Genting Bhd owns 48.65%

RNAV valuation (RMm)
Gaming operations DCF (3% TGR, 11% WACC) 13,618.1
Net cash as at 31 Dec ‘09 5,112.4
Star Cruises market value at USD0.24/share 1,174.6
Wisma Genting and Segambut property 284.1
RNAV 20,189.2
No. of shares 5,940.1
RNAV/share 3.40
Target Price 3.40
Source: Maybank-IB

Genting Berhad
Ticker GENT MK
Share Capital (m) 3704.77
Market Cap (RMm) 26229.79
Major Shareholders
Kien Huat Realty 32.21%
Harbor Capital Advisors 3.56%
Tinehay Holdings 3.29%

Genting Bhd’s SOP table RNAV (RM)
Listed Assets
Genting Malaysia 10,394.9
Genting Plantations 2,726.9
Genting Singapore 14,626.0
Book value of listed assets 2,386.8
Excess from listed assets 25,361.0
NPV of Other Assets Management fees 2,860.8
Genting Sanyen Power 1,627.0
Oil and gas 647.3
Wisma Genting 240.0
Book value of other assets 1,800.0
Excess from other assets 3,575.0
FY09E company book value 7,174.4
Net Asset Value (RMm) 36,110.4
Total no. of shares (m) 3,703.8
NAV per share (RM) 9.70
Target price (RM/share) 9.70
Source: Company, CIMB Research

I have just taken research samples from the two better local research outfits. Nobody talks about "growth", they harp on RNAV, so much so that both have set the RNAV as their target prices. Isn't that strange? Coincidence? Well, probably not so. Both are expecting some significant corporate exercise in the works.

a) If we look at the group's strategy, they are making Genting Berhad as the holding company. Like it or not, much of the family's wealth is tied up in Genting Berhad and to a much lesser extent effectively at both Genting Singapore and Genting Malaysia.

b) The payback period for Genting Singapore will be out there somewhere, a pretty long time away despite looking to be good long term assets.

c) If they will be using Genting Berhad as the holding company, it will be the main M&A vehicle going forward.

d) That being the case, the ammunition power should reside in Genting Berhad.

e) That means Genting Malaysia is holding about RM5bn too much money for all intents and purposes.

f) Genting Malaysia is being remodeled into a dividend stock as Resorts World is a cash generating cow but there is little to expand in Malaysia. I mean, seriously, any more add ons to Genting Highlands will result in serious soil erosion. By leaving Genting Malaysia having just Resorts World, it alienates the risk of that "casino license" being revoked in the future, should that occur. Nobody can totally rule out that risk. Do we know how local politics will play out in 2 years time, what about 5 years or 10 years down the road? By making it a dividend stock, it is facing the reality that there is no growth for that company except organic growth.

g) Following that masterplan, you would want to take out the RM5bn. Genting Malaysia has 5.9bn shares. That works out to RM0.86 per share. A RM0.50 special dividend would tie in nicely with the celebration of the opening of Resorts World Sentosa. A RM0.50 special dividend would send Genting Malaysia rocketing past RM3.00. That surge will put Genting Berhad's into positive territory as well because it will receive RM1.416bn cash. Genting Berhad has about RM1.01 cash per share as it is, or RM3.737bn cash. Added together, that will come to RM5.153bn or RM1.39 cash per share. Of course, they could in the end decide not to do anything with the cash in Genting Malaysia - but chances are they will do something with the cash soon. There is always the concern that Genting Malaysia may not want to issue a special dividend as the family does not control majority of the stock - that's a pretty naive way to run a listed company because these companies are so big now that its virtually impossible to own a majority of the shares. The companies only got so big because of the way they tap capital.

h) Some have been speculating that Genting Berhad should be getting out of plantations, oil & gas and their power business. That would make sense if they want to extract more cash from Genting Malaysia by selling "yielding assets". In that argument, the power plant business could be sold in another RPT back to Genting Malaysia.

As I have said, Genting Berhad is likely to be its holding company, which should means that most of the mentioned assets will stay in the books. While I have always argued that companies should be focused rather than look like a conglomerate - in Genting group's case, they have relatively "pure vehicles" already in Genting Singapore and Genting Malaysia.

I know all this looks more like guesswork but I am willing to place my chips on the table in anticipation of the January 2010 soft opening for Resorts World Sentosa. There is also the likelihood of a likely "euphoric reassessment" of Genting Singapore when that happens. You know how traditional Chinese business people like to make "good things" happening all at once!!! Even if nothing happens, it is not going to cost me much to square off a few months later.

p/s photo: Noon Wongsawan

The above were views on stocks and sectors that I like, not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

Genting Babies - Left Hand, Right Hand & Minority Interests

I am not sure the term "minority interest" appears in Genting's corporate vocabulary.

Genting Malaysia (Resorts) had entered into S&P agreements with parent Genting Berhad to acquire:
a) 25-storey Wisma Genting office building for RM259.6m (including RM46.9m debt owed to Genting Berhad) ; and
b) Segambut land comprising 2 adjoining land parcels with total area of 380,906 sq ft for
RM24.6m (including RM8.6m debt owed to Genting Berhad) .

Both acquisitions will be financed from Genting Malaysia's cash reserves ofRM5.2b as of 30 Sept 09. Independent market valuation for Wisma Genting and Segambut Land at RM277m and RM25.8m respectively. The acquisition price for Wisma Genting and Segambut Land imply a 6.3% and 4.7% discount to the market valuation respectively.

The purchase price at: a) RM635 per sq ft for Wisma Genting; and b) RM65 per sq ft for Segambut Land. Rental savings and income from property investments. Genting Malaysia is currently the single largest tenant for Wisma Genting, occupying 8 floors and 2 basement levels for an annual rental of about RM3.0m. Apart from the rental saving , group will also receive an annual rental income of RM17.3m from other tenants. Together with the savings, investment in Wisma Genting will provides a decent yield of 0.7%. Annual rental savings of about RM0.3m is also expected from the Segambut land as group is the sole tenant renting part of the land as storage area for its buses and limousines . As the Segambut land is only 12% occupied as storage, there is potential to convert the remaining land for property development.

#1: You cannot just say to yourselves that this related party transactions was transparent and above board. You must have the appearance of being transparent as well. Having the same-one valuer does not look good. By right, both the companies should appoint their own valuer, not just one valuation company.

#2: Board composition:
Genting Malaysia (Resorts)
Alwi bin Jantan - Independent director
Wan Sidek Rahman - Independent director
Mohd Haniff Omar (on Genting Bhd board)
Lim Kok Thay (on Genting Bhd board)
Clifford Herbert - Independent director
Loh Bee Hong (on Genting Bhd board)
Lin See Yan - Independent director - (on Genting Bhd board as Independent director as well)
Quah Chek Tin - Independent director - (on Genting Bhd board as Independent director as well)
Mohd Zahidi Zainuddin - Independent director

Thillainathan Ramasamy - Genting Bhd's Independent director
Chin Kwai Yoong - Genting Bhd's Independent director
Nik Hashim Nik Yusoff - Genting Bhd's Independent director

How can you justify having 2 independent directors THAT sits on both companies, one which owns 47% of the other, and call those two directors as independent directors??? Somebody give us a proper business dictionary please!!!!

You not only need to be transparent in your dealings but must appear to be transparent as well. The board's composition for both boards have more double counts than really independent directors. Something needs to be done already with regards to the board's composition, because if not, every single related party transaction now and in the future will ALWAYS be seen in a "conspiratorial" manner. For such an important and visible and international listed company, professionalism and global best practices should be adopted. The company should try to shed its "family company" image if its to continue to global investors respect and recognition for being a well run, transparent, professional and 'above board at all times' kind of company.

#3 Cash extraction - The move may be interpreted as the parent extracting cash from Genting Malaysia. Technically, the move actually provides good yields to Genting Malaysia. But that is not the point or the major concern - if its good for one party, it must be not so good for the other party. Questions will surface as to why Genting Malaysia is being used to keep properties and land, is that a long term strategy to accumulate properties or a slipshod move, neither here nor there. Why is Genting Berhad hiving off assets, is that a long term strategy to be purely gaming - NO of course, have you had a look at Genting Berhad's portfolio???

#4 - Genting Berhad's portfolio dissection - Please tell me how the RPT make sense when in your portfolio of assets you have the following:
a) Genting Malaysia 47%
b) Genting Singapore 54.3%
c) Genting Plantations 54.7%
d) Landmarks 30.3%
e) Oil & Gas ?? (RM1.9bn market value)
f) Power ?? (RM3.0bn market value)
g) Licensing & mgmt fees ?? (RM5.7bn market value)

If you wish to do as you like, then for heaven's sake take the whole bloody thing private. If you want to run it like a family concern, take the whole thing private. You cannot try and tap capital and have investors on board (no matter how small they may be compared to the controlling interest) and still run it like its a family affair.

Considering that the mainshareholder of Genting Berhad shows only Kien Huat Realty with 32.32%, the next few substantial shareholders stand at: 3.8%; 3.57%; 3.3% and 2.6% ... that clearly shows that the free float is huge, i.e. the minority interest is bloody huge.

To the minority interest of Genting Berhad, I am sure having an open tender would have shut 99.99% of us up, it would have shut me up for sure. An open tender may have gotten a better price for Genting Berhad ~ why leave that question mark in our minds, leaves a bloody bitter taste even for such a small transaction. If we cannot "trust you" in these small transactions, how can we trust you in bigger ones?

p/s photo: Dhini Aminarti

And They Say There Is No Collusion ...

You can actually get governments to do certain things. Shares of Macau plays rocketed yesterday, bucking the general market declines, following a report that China has quietly eased restrictions to allow residents of Guangdong province to visit the enclave more frequently.

Industry executives now expect the Macau casino sector to bring in record gaming revenues in October, boosted by the looser restrictions and the upcoming Golden Week holiday, Reuters reported.

Galaxy Entertainment (0027) jumped 9.5 percent to close at HK$3.79, defying a 0.7 percent decline in the benchmark Hang Seng Index.

Shun Tak Holdings (0242), a Macau- focused conglomerate controlled by the family of Stanley Ho Hung-sun, jumped 9 percent to HK$6.69. SJM Holdings (0880), Ho's casino flagship, rose 5.1 percent to HK$4.52. Melco International Development (0200), which is owned by Lawrence Ho Yau-lung, jumped 7.7 percent to end the day at HK$5.87.

The authorities now allow mainland travelers from Guangdong to visit Macau once a month under the Individual Visit Scheme, instead of just once every three months, Reuters quoted industry sources as saying. The restrictions started to be relaxed 2 months ago and were loosened even further since September 1.

"Gaming revenues for the first two weeks of the month have been good," one executive said. Another unnamed casino executive said September gaming revenues will be "very good" and October will likely set a new record high. Now is it just kind timing or what??? Just when the 3 major operators in Macau have filed for IPOs in HK, we see these restrictions being lifted??!!

Backed by big-name cornerstone investors, the institutional tranche of Wynn Macau's HK$12.6 billion public offering was oversubscribed by up to five times when it started bookbuilding yesterday.

The casino operator attracted six high-profile investors who poured US$250 million (HK$1.95 billion) to subscribe for shares with a six-month lock-up period. They include Lifestyle International (1212) managing director Thomas Lau Luen-hung who subscribed for US$50 million worth of shares and Sun Hung Kai Properties (0016) non-executive director Walter Kwok Ping-sheung who is seeking US$20 million worth.

Wynn Macau plans to offer 1.25 billion shares at HK$8.52 to HK$10.08 each, which is 29.4 to 34.8 times its estimated earnings per share of 29 HK cents this year. Wynn Macau's net income slumped 34.8 percent to HK$903.7 million for the first half ended June 30 as Macau's gaming industry contracted.

These developments will pave the way for a spectacular listing of Wynn Macau and Macau Sands - and guess what, Genting Singapore will be an indirect beneficiary, followed by Genting Berhad, but the former is a much better play.

p/s photos: Miwa Oshiro Cocoa

Rights Issues Like Big Pills, Hard to Take

Rights issues have always been regarded badly by investors. Has there ever been a rights issue that has been warmly welcomed by investors? Investors frown on rights issue because the company wants more money from them. Investors need to think more clearly, the money is in exchange of additional shares. If the investor bought the shares because he/she believed in the story or growth plans of Company A, then why sell when they announce a rights issue? Doesn't the rights issue tie in with the plans? S$1.5B in expected funds raised. Genting Singapore intends to use approximately 60% of net proceeds raised from the rights issue for funding of future acquisitions and/or investments undertaken by the group. The remaining 40% will be used for working capital purposes and includes repayment of bank borrowings.

In my view, most investors should already know that a rights issue was coming, why was that a surprise? If investors sold because they do not want to cough up more money, ok that is understandable. Looking at the shareholders of Genting Singapore, it looks like the biggest burden will be on Genting Berhad to raise the funds. Genting Singapore is just slapping open its palm for more money and a hot growth story.

The Singapore gaming story has taken on wing over the past few weeks following the much improved gaming industry in Macau, so much so that Sands and Wynn are both quickly thinking of lodging IPOs in HK for their Macau operations. The improved sentiment means improved valuations on Singapore casinos.

This is a minor hiccup, I still see more and more analyst reports upgrading their target pricing from S$1.10-1.20 to the S$1.50 level over the next few months.


p/s photo: Park Ji Yoon

Whoops!!! There It Is - Resorts World

Genting Bhd., Asia’s largest listed casino operator, bought a 3.2% stake in MGM Mirage for US$100 million, MGM spokesman Gordon Absher said. The purchase last month was reported by The Financial Times yesterday. Genting and Resorts World each subscribed for USD50m of MGM's senior secured notes on 14 May '09 as well.

The share purchase was not disclosed to Bursa Malaysia. The shares purchased were part of MGM’s US$1bn equity offering priced at US$7.00/share in May 2009 to help repay the group’s swelling debts. The acquisition of 14.3m shares in MGM represents a small percentage of MGM’s total share base of 441m shares, and an even smaller 2% of the group’s gross cash balance. The acquisition is classified as an investment in the group’s balance sheet with no impact on earnings - however, strategically it makes a lot of sense to Genting and Resorts as that would allow them a foot in while MGM grapples with huge refinancing issues ahead. The acquisition price values MGM at 0.48x PBV and 11.2x FY10 consensus estimated EV/EBITDA, which may be relatively expensive given MGM’s high gearing and potential for future cash calls and hence dilution.

MGM is currently in discussions with its bankers and its strategic partner Dubai World to help salvage its US$8.6bn City Centre Las Vegas Resort development project, which could potentially require a new partner if MGM, Dubai World and its bankers are unable to come to an agreement on the necessary funding to ensure the completion of the project. However, Genting and Resorts are not interested in Las Vegas properties anymore. They are really keen to get a slice of the Macau action. Even after raising US$1bn from its recent equity raising exercise, MGM is still burdened with a fair degree of debt on its balance sheet with an estimated debt to equity ratio of 249%, or net debt of US$12bn. MGM would have to dispose of more assets or stakes in its existing projects to reduce the risk of bankruptcy, even with its US$2.5bn secured notes and equity raising exercise. This will certainly open up opportunities for the Genting group to participate in future project partnerships with MGM, or make outright casino acquisitions, at relatively appealing valuations.

Macau remains the group’s key geographical expansion focus as it continues to access acquisition opportunities. It is noteworthy that the Nevada gaming commission has hinted broadly that they did not particularly like MGM to be in partnership in Macau with the Ho family. While the commission's views are not binding and not enforceable, it does carry some weight. A very convenient transaction would be to swap the Ho's family stake in MGM's partnership to Genting or Resorts.

Having said that, I prefer Resorts World to Genting. One, is the overall exposure to Genting Singapore. Two, Resorts is the better vehicle for any substantive M&A given its large and growing net cash pile of RM4.9bn. This is further reinforced by the fact that management has continued to maintain that Genting will remain as an investment holding company. Resorts would have to upstream a significant portion of its cash to Genting for it to undertake large M&As.

The purchase utilized only 11% of Genting’s net cash as at end 1Q09. 48% subsidiary, Resorts World’s with its net cash of RM4.6b as at end-2008 could easily acquire a 40% stake in MGM. MGM owns 16 properties in the US and has a 50% interest in four other properties (one in Macau). Its net gearing position as at end 1Q09 stood at 318%. Should MGM decide to sell its casino assets to pare its debt, Genting will likely be well positioned to acquire them. Given that MGM recently raised USD2.5b in capital, which is insufficient to plug the holes. it is likely that MGM is planning some major asset disposals very soon.

I like Resorts World up to 2.95. Again, like I said before, I am only interested in returns of at least 30%-50% in 6 months.

4715	RESORTS	2.870	-0.010	46,384
4715CH	RESORTS-CH	0.135	-0.005	7,886
4715CI	RESORTS-CI	0.155	-0.005	24,790
4715CJ	RESORTS-CJ	0.175	-0.005	5,657

p/s photo: Eva Huang Shenyi

Genting Singapore Being Queried By SGX

The hoo-hah yesterday in Malaysia and Singapore markets was the sell down in Genting Singapore, Genting Berhad and Resorts World. The whole thing rested on the news that the Lim family disposed their private stake in Genting International. Seriously, the majority of investors in Malaysia were trading blind for most of the morning session because they did not get any news or hints. Same can be said for Singapore save for a substantial drop early in the session in Genting Singapore prompted swift action by SGX to the company querying the drop. The message was posted at 9.38am yesterday. The company answered at 1.21pm after the close of the first session yesterday that they received notification of the sale from the sellers at 12.32pm yesterday.

There are a few uncomfortable issues in that rumours of the deal and the details were floating way before the markets opened yesterday. FinanceAsia had a scoop and the article was available early yesterday. Yes, the article was based on sources close to the deal, which is hard to patrol by the exchanges or the company. The interesting thing was that FinanceAsia was able to say that the deal was launched from 8.30pm the previous day (26 May). Safe to say that the buyers were enticed by the big discount. It is also safe to assume that those who bought will also know that they are likely to get their bids fulfilled, and would sell first thing the next day to lock in the spread (profit). The sad thing is that most of the buyers are not privy to the information and may think they are getting in cheap.

The deal should have been closed before the markets opened. The market should have equal access to information for a fair trading market with integrity. When one side of the buyer-seller have an unfair advantage, that's not right.

You cannot stop the media from trying to get the scoop, that will always happen. What the exchanges and companies must do is to eliminate these situations from resulting in an unfair situation. At fault here are the investment advisors, they should advise the sellers on the timeline and progressive steps to do the deal so as to eliminate the "gaps" between striking the deal, placing the deal, and announcing the deal to the company. J.P. Morgan and UBS acted as joint bookrunners and underwriters for the deal.

SGX should reprimand the advisors severely, even a fine is in order considering the amount of "losses" suffered by the innocent buyers.

--------------------------------
FinanceAsia: The 853.88 million shares were offered in a range between S$0.72 and S$0.76 and late last night the indication was that the price would be fixed at the bottom for a total deal size of S$614.8 million ($425 million). However, the deal wasn't launched until 8.30pm Hong Kong time yesterday and, at the request of a number of Asian investors, sources said the bookrunners had agreed to open the books for a short while before the start of trading this morning to give those who were unable to make an investment decision last night a second chance.

--------------------------------

27-May-2009 09:38:45
Mr. Terence Tay Wei Heng
General Counsel
Head, Corporate Affairs
Resorts World at Sentosa
39 Artillery Avenue, Sentosa
Singapore 09998

Dear Sir,

QUERY REGARDING TRADING ACTIVITY

We have noted, and draw to your attention, a substantial decrease in the price of your shares today. To ensure a fair and orderly market, please answer each of the following:

Question 1: Are you aware of any information not previously announced concerning you (the issuer), your subsidiaries or associated companies which, if known, might explain the trading?
- If yes, the information must be announced immediately.

Question 2: Are you aware of any other possible explanation for the trading?

Question 3: Can you confirm your compliance with the listing rules and, in particular, listing rule 703?

Please respond immediately via SGXNET. Where appropriate, you may want to request a trading halt or a suspension of trading. Please contact Market Control (or, if you need to discuss the matter, your Account Manager in Issuer Regulation) immediately. Thank you for your cooperation.

We have released this letter via SGXNET.

Yours faithfully

-------------------------------

27-May-2009 13:21:33
Glenn Seah
Vice President
Head, Market Surveillance
Risk Management & Regulation

Notes:
1. Subject to limited exceptions in rule 703, an issuer must announce any information known to the issuer concerning it or any of its subsidiaries or associated companies which is necessary to avoid the establishment of a false market in the issuer’s securities, or would be likely to materially affect the price or value of its securities must be publicly disclosed (rule 703).
2. An issuer must undertake a review to determine the causes of any unusual trading activity (paragraph 20 of Appendix 7.1).
3. An announcement should, among other things, state whether the issuer or any of its directors are aware of the reasons for the unusual trading activity and whether there is any material information which has not been publicly disclosed (paragraph 31 of Appendix 7.1).
4. Your responsibility under listing rules is not confined to, or necessarily satisfied by, answering the questions in this letter.

We refer to the queries from the Singapore Exchange Securities Trading Limited (the “SGX-ST”) regarding the substantial trading activity of the shares of Genting Singapore PLC (the “Company”) today.


SGX Question 1:
Are you aware of any information not previously announced concerning you (the issuer), your subsidiaries or associated companies which, if known, might explain the trading?

Reply:
The Company is not aware of any information not previously announced concerning the Company, its subsidiaries or associated companies, which if known, may explain the trading.
However, we wish to inform that the Company has just received confirmation from the following substantial shareholders at 12.32 p.m. today that:-
(i) Kien Huat Realty Sdn Berhad has disposed of 265,809,000 shares in the Company by Lakewood Sdn Bhd via a placing agreement;
(ii) Parkview Management Sdn Berhad as trustee of a discretionary trust, has disposed of 265,809,000 shares in the Company by Lakewood Sdn Bhd via a placing agreement; and
(iii) G Z Trust Corporation as trustee of a discretionary trust, has disposed of 649,073,320 shares in the Company by Golden Hope Unit Trust via a placing agreement.

The respective substantial shareholders will in due course be releasing the relevant Notice of Substantial Shareholder’s Change in Interests/Cessation of Interests (as the case may be).


SGX Question 2:
Are you aware of any other possible explanation for the trading?

Reply:
Saved as disclosed above, the Company is not aware of any other possible explanation for the trading.


SGX Question 3:
Can you confirm your compliance with the listing rules and, in particular, listing rule 703?

Reply:
The Company confirms that it is in compliance with the listing rules and, in particular, listing rule 703 of the Listing Manual of the SGX-ST.


For and on behalf of the Board
Genting Singapore PLC
Justin Tan Wah Joo
Managing Director
27 May 2009


p/s photo: Ayame Misaki

Lim's Family Sells Stake In Genting Singapore

Genting and Resorts had a nice run for the past two weeks. I did not highlight both companies as buys because I am not convinced that the gaming industry restructuring and pain is over by a mile. But if they want to go up, let them. I do not have a strong case against them except that the Sentosa project cost overruns needs to be detailed out to investors. I did not like the left hand right hand transaction between Lim Kok Thay's private company to the listed vehicle a few months back.

I like the fact that Genting and Resorts are much better off than most of the other gaming giants who have over leveraged substantially. I like the fact that most operators in Macau are bleeding and that Genting/Resorts should be able to profit by moving in as a white knight to secure a foothold in Macau.

The sale, through the family’s vehicles Golden Hope Ltd and Lakewood Sdn Bhd, was aimed at boosting the liquidity of the stock, according to the bookrunners .... eeerrr... Genting Singapore is already very liquid thank you very much, next reason please!!! That's like tricking the ghost to eat taufoo!!! Hmmm... who is the ghost here??

I don't like it when the Lim family's private vehicles start to sell down shares in Genting Singapore. Suffice to say that they think Genting Berhad's 55% stake in Genting Singapore is deemed sufficient, or so they say. As in anything, remember Gamuda's Lin selling his stake substantially, supposedly to facilitate estate planning for his family... well we know what happened to Gamuda after that. Its never a good sign. Chances are that Genting Singapore will have to pile on more borrowings, from Resorts or Genting Berhad as I really think the cost overruns issue has not ended. If it has, please come forward with absolute transparency, how much was budgeted before the project started, what is the variance now, how will that impact the payback period, when can Genting Singapore start paying back dividends? Its looking to be a very very long investment.

--------------------

Finance Asia: Two investment companies controlled by Malaysia's Lim family were in the market last night attempting to divest their direct 9% stake in Genting Singapore, a Singapore-listed subsidiary of the Genting Berhad group. Genting Singapore is involved in international casino operations and the development of integrated resorts, including a new casino resort on Singapore's Sentosa Island, which is due to open in the first quarter of next year.

The 853.88 million shares were offered in a range between S$0.72 and S$0.76 and late last night the indication was that the price would be fixed at the bottom for a total deal size of S$614.8 million ($425 million). However, the deal wasn't launched until 8.30pm Hong Kong time yesterday and, at the request of a number of Asian investors, sources said the bookrunners had agreed to open the books for a short while before the start of trading this morning to give those who were unable to make an investment decision last night a second chance.

As a result, the terms will not be fixed until this morning. However, the deal was already covered last night and the books included close to 40 accounts. The buyers ranged from specialist gaming investors to long-only Asia funds to deal players who liked the big discount.

The price range corresponded to a discount range of 12.1% to 16.8% versus yesterday's close, which at first glance looks well wide of where most other recent Asian placements have priced. However, the share price has rallied 18.5% over the past three trading sessions, which means investors may have needed the additional incentive to invest at current levels.

There is a lot of positive momentum surrounding the company at the moment however and the share price has more than doubled from the beginning of March when it matched its 2009 low of S$0.415. The company has caught the attention of investors as, contrary to other casino and resorts developers, it is seemingly having no problems to stick to its completion target.

This was confirmed two weeks ago in connection with Genting Singapore's first quarter earnings release, when the management said that it will deliver the Sentosa resort on time and on budget. It also stressed that there is no need to raise more money for this project. This is in sharp contrast to some of its larger rivals like Sands and MGM, which are already laden with debt and have been forced to delay projects because of difficulty in securing the necessary funding. In fact, market talk has it that MGM is looking to sell its 50% stake in MGM Grand Macau and Genting may be a potential buyer.

Aside from Singapore, Genting currently has casino and leisure operations in Australia, the Americas, Malaysia, the Philippines and the UK, but nothing yet in Macau.

Sources say the fact that the Lim family is selling its entire direct stake in Genting Singapore, which it holds through investment companies Golden Hope and Lakewood, isn't a reflection of its views on the company. But with the share price having gone up so much in such a short time, it makes sense for them to monetise part of their holdings. It will also streamline the family's holding in the casino business through one vehicle. The family will still control 55% of Genting Singapore through Malaysia-listed conglomerate Genting Berhad.

J.P. Morgan and UBS acted as joint bookrunners and underwriters for the deal.

p/s photos: Linda Chung Kar Yan