The Gentings-Resorts Poser

Both counters went ex-subdivision on 11 April 2007, amassing huge gains. Gentings added 50 sen and Resorts took in 28 sen. However, on the following two days, the mood turned nasty and they sold both counters down the river. Gentings went as low as RM8.35 and Resorts to RM3.40.

Why is there this contrasting scenario before the subdivision and after the subdivision of the shares? No facts have changed. The negative news of UK 's intention to subject betting licences to additional taxes or for that matter the uncertainty of the Sentosa Island casino licence has not changed. The market is fickle!

The only logical explanation is that those who had the extra lots wanted to dispose of them because there believe there was no longer any “up-side news”. To play safe,they will just hold a lot or two as keepsakes and locked away all the profits. Similarly, some Singapore fund-managers could have sold on Day 1 because of the good profit margins. Then, there are the jittery sellers who saw the breaching of the 1,300 level as Bursa Armageddon and have been liquidating. Other than that, there is just no good reason for the selling pressure.

Both Gentings and Resorts are solid blue-chips and should pay well in the medium term. As we take cognizance of the downsides of both counters, let us not be unduly disturbed by short-term analysis. Analyses are based on static facts but the market is dynamic. Anything can happen. To me, both counters are dynamic and resilient.

From time to time, I will make my comments on both theses counters. The important thing is to look for the new support price of both counters. It appears that the support price of Gentings is RM8.75 and Resorts -RM3.50.

Resorts had never offered an IPO to the investing public except for a restricted bumiputra public offer way back in the late 80s. At the current price level, Resorts is now going for RM3.50–dirt cheap by any standard. Good to collect for the medium term.

As for Gentings, when was the last time you could confidently buy up a lot or two? Just like Resorts, it is rather inexpensive at RM8.75. The Bursa seems to have run out of good counters at this point of time and my belief is, Gentings still possess good ‘intrinsic value’. So do not hesitate, invest in this counter.

For your information, I have seen the market collapsed during the First Gulf War and during the Asian currency meltdown in 1997. Believe me, on both occasions, the counters that rebounded the fastest were gaming stocks like Gentings, Resorts, B-Toto and Tanjong. Also during recession, these are the best defensive stocks. Dividend-wise, Gentings and Resorts have been paying fair dividends.

The world is Gentings’s and Resorts’s oyster. Good news can be created by the dynamic Gentings Group when opportunity arises. A changing scenario can impact prices again towards a northerly direction for both counters.

Quote of the Day:

‘All progress occurs because people dare to be different.’ Harry Milner

Heartsong