3 Wise Views on Genting Singapore PLC

Three wise men were blindfolded and led one at a time into a room where an elephant stood. Each was asked to discern what was in the room without removing his blindfold.

The first, upon touching the elephant’s trunk, concluded a “snake” was in the room. The second, upon contacting a leg, concluded a “tree” was in the room. The third, upon grasping the tail, concluded a “rope” was in the room. All were surprised to discover the elephant once their blindfolds were removed.

— old Indian fable

You may have heard this old fable before. The three blindfolded wise men were not able to make a good guess of the complete picture (in this case, an elephant). It can be the same with investing.

For any potential investment, our own view may be limited, and we may miss some major points. We could always do with more intelligent and Foolish perspectives.

To demonstrate, let’s use integrated resort owner Genting Singapore PLC  (SGX: G13) as an example. The majority of Genting Singapore’s revenue, of course, comes from its casino located within its flagship Resorts World Sentosa.

You can read more about the company here.

With this company, I would like to share three possible views, from three differing investor personalities no less. They are the value investor, the income investor, and the growth investor.

The value investor’s view

At its current price of $1.01, Genting Singapore is carrying a trailing price-to-earnings (PE) ratio of some 23. The value investor may notice that the company’s PE ratio is higher than the SPDR STI ETF’s (SGX: ES3) trailing PE of 14; the SPDR STI ETF is a proxy for Singapore’s market barometer, the Straits Times Index (SGX: ^STI).

As such, this ratio might not catch the interest of the value investor.

On the other hand, Genting Singapore’s historically low price-to-book ratio of 1.2 (the company has an average PB ratio of 2.7 over the past five years) might provoke some thought in the value investor.

The income investor’s view

Genting Singapore has a meager trailing dividend yield of 1% based on its current price.  The dividend per share payout has also not increased in the past four years, remaining stagnant at 1.0 cent per share. These characteristics may not make Genting Singapore attractive to the income investor.

That said, the company has generated increasing levels of free cash flow (operating cash flow minus capital expenditure) since 2011. This was partly due to the reduction in capital expenditure, which more than made up for a decline in operating cash flow. But in any case, the free cash flow might provide financial viability to the dividend payout.

genting cashflow-fcf

Source: Genting Singapore’s Earnings Report

In all, the income investor may prefer to see a larger dividend payout, or an increasing dividend trend.

The growth investor’s view

The growth investor might be quite puzzled with any attraction behind Genting Singapore.


Source: Genting Singapore’s Earnings Report

Revenue from the largest segment for the firm – the gaming segment – has been on a down trend for four years and could be hard to predict, as you can see in the chart above. Furthermore, Genting Singapore’s overall revenue hasn’t been able to enjoy any consistent growth.

On the other hand, the company is developing a new hotel in Singapore’s Jurong Lake District. It has also just recently started development works for its Resorts World Jeju project in South Korea’s Jeju Island.

These actions – which hold the potential for helping to boost the firm’s top-line – may provide solace for the growth investor. But at the moment, it may be hard for the growth investor to consider Genting Singapore.

Foolish summary

So, there you have it. Three quick perspectives from three different investor personalities looking at the same company. Thinking as different investor personalities and coming up with different views can be a useful exercise for us.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.