Genting Singapore Ltd (SGX: G13) is the operator of the integrated resort, Resorts World Sentosa. Among the resort’s many attractions are one of Singapore’s two casinos and the Universal Studios Singapore theme park.
In the last six months, Genting Singapore’s share price has declined by about 20%. In a previous article here, I looked at the reasons that might have contributed towards the decline in its share price. Still, there are many things investors should like about the company. I’ll take a look at two of those in this article.
One of the main reasons to like the company is its ability to generate sustainable cash flow over a long period of time. Let’s consider some numbers below.
In the last five years, Genting Singapore has been generating positive operating cash flow in every single year. What’s more, operating cash flow grew from S$955.6 million in 2014 to S$1.15 billion in 2018. Cumulatively, the operating cash flow in the last five years totaled about S$5.8 billion.
For a company that is trading at a market capitalisation of roughly S$10.6 billion today, such operating cash flow is pretty significant. Personally, I like a company that can generate sustainable and growing cash flow over the long term.
Strong balance sheet
Another thing to like about Genting Singapore is its strong balance sheet. This is not surprising, given it generates a huge amount of cash flow (as we can see from the above). But how strong is it? Again, let’s look at the numbers below.
As of 30 June 2019, Genting Singapore has S$3.6 billion in cash while its borrowing stood at S$269.1 million, giving it net cash of roughly S$3.4 billion. Such numbers indicate that the company has solid balance sheet strength.
Again, a company that has a solid balance sheet is a big positive as it can withstand the ups and downs of the business cycle. What’s more, it has the necessary means to sustain its dividend, as well as the firepower needed to invest for the future.
Overall, I think Genting Singapore is a company with desirable qualities – two of which are a strong cash flow generation record and a rock-solid balance sheet. Thus, I’d say the recent decline in its share price provides a good opportunity for investors to consider its stock for their portfolio.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.