Resorts World - a long term perspectiveResorts World Berhad (Resorts) is a counter with much hidden potential. After the Genting Group won the second casino project in Singapore, there were some untoward development when Stanley Ho, the Macau casino king took a shareholding in Star Cruise. The Singapore Government's apprehension to this development caused a bit of a stir and the prices of both Genting and Resorts were affected.
However, Star Cruise sold their shares in the Sentosa Island project and all is fine now. The Sentosa Island Resort project will be operative in 2010 and it will only take a year to recoup all the expenses. After that it is pure profits. So buy Genting shares as well.
As the project is called the Resorts World at Sentosa, many are speculating that the integrated project will be managed by Resorts as well. They have even envisioned that Resorts World Sentosa will be injected into Resorts to make the entity a purely leisure and gaming company. If that should happened, then Resorts is due for a re-rating in its evaluation viz-a-viz its peers world-wide which are trading at 40-50 times their PER as compared to Resorts's conservative 16 times PER.
Star Cruise which has been plaguing the bottom line of Resorts for a long time is also set to change. Two new ships Pride of Hawaii and Norwegian Pearl have been added to their fleet. These are expected to contribute significantly to Star Cruises bottom-line this year. Coupled with the falling oil price, Star Cruises may turn around and provide profits to Resorts in the coming years.
The Visit Malaysia Year 2007 campaign has already paid visible dividends to Resorts since the tourist arrivals to Genting Highlands have been extra good lately. Hotel occupancy is expected to go up 5 % from the current 80%.
Except for the haze which may affect tourist arrivals and the possible price of petrol rising, Resorts is sailing gracefully into calmer waters with more expected profits. Macquarie expect Resorts to make RM1.2 billion in net profits for FY2007 whilst OSK was even more positive; estimating it to be at RM1.3 billion.
Since there is so much buying of Resorts in the market the last 4 days, let us trace its price trajectory for the remaining weeks of July 2007.
Heartsong
Star Cruise which has been plaguing the bottom line of Resorts for a long time is also set to change. Two new ships Pride of Hawaii and Norwegian Pearl have been added to their fleet. These are expected to contribute significantly to Star Cruises bottom-line this year. Coupled with the falling oil price, Star Cruises may turn around and provide profits to Resorts in the coming years.
The Visit Malaysia Year 2007 campaign has already paid visible dividends to Resorts since the tourist arrivals to Genting Highlands have been extra good lately. Hotel occupancy is expected to go up 5 % from the current 80%.
Except for the haze which may affect tourist arrivals and the possible price of petrol rising, Resorts is sailing gracefully into calmer waters with more expected profits. Macquarie expect Resorts to make RM1.2 billion in net profits for FY2007 whilst OSK was even more positive; estimating it to be at RM1.3 billion.
Since there is so much buying of Resorts in the market the last 4 days, let us trace its price trajectory for the remaining weeks of July 2007.
Heartsong
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