Just want to add my 2 cents on Resorts.

Resorts is sitting on $4 billion in cash and equivalents with no borrowings (it paid off its $1.1 billion convertible bond last year). Therefore after deducting its cash from today's closing of $2.43, you are actually only paying $1.68/share (There's about 5.7 billion shares outstanding). It generates about $1.8 billion in cash annually or about $0.30/share. Which means, the price(net of cash)/earnings per share is at a relatively low 5.6 times. It has also exited its loss making investment in Star Cruises.

As Genting may need money to fund its capex for Sentosa and also losses at its UK casino operations, there may be a need for Genting to access the cash and cash generating ability of Resorts. Potential privatisation candidate?? You may need to do your own valuation (e.g. enterprise value) on the counter though.

The not so positive points about Resorts is that it is only exposed to the casino industry in Malaysia, which means its growth potential is limited (it transferred its international operations to shareholders last year) and it is not likely to pay good dividends as its parent, Genting only hold 48%. [Nevertheless, I don't mind low payout in dividends in exchange for increase in price due to the taxation on dividend income]

This post has been edited by nven: Oct 22 2008, 11:57 PM

Majority of the analysts have buy calls on Resorts. Looks like some are even saying its one of the key defensive stocks in Bursa.