Friday, July 13, 2007

Resorts World Finally Sold Out Some....


Well, it was fun while it last. The losers had deep pockets and could take some losses for a failed investment.

So eventually Resorts sold out 14.2 % of its stake in Star Cruises Ltd for HK$2.65 billion or HK$2.62 per share to CMYC Ltd. The profit attributable to Resorts from this disposal is RM309.7 and it will increase Resorts EPS by 5.67 sen per share. With this disposal, the balance of Star Cruises share in the coffers of Resorts will be 19.7%. After the disposal, Star Cruise will no longer by equity accounted by Resorts. The sale will be competed in three weeks' time.

I do not believe this is the only sale. I think it is the first tranche. Any good offer will definitely be seriously considered by Resorts so that it can come away and become a full-fledged casino operator. The opportunities to focus on casino busineses in Japan and the Philippines looks promising. The Sentosa Integrated Resort Project also needs its expert management.

The frenzied buying of Resorts yesterday and today indicates a re-rating for
its shares by fund managers. Once the fund-managers have done their analysis and added up the new numbers, they will come in to buy Resorts some more. I can see an upside of another 5% in price. The counter should trade at its new fair value of RM4.20.

Heartsong

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