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Friday, October 1, 2010

Genting Singapore target price $2.50

Recent correction and profit taking of Genting Singapore is somewhat a healthy sign. A great chance to step in. Tourist arrivals to Singapore has been steadily increasing. Once again proving that being the hub, a central stopping place for travellers, an excellent airport, MRT, and relatively fair prices for food and lodging, gives Singapore the edge to continually being at the back of the mind of vacation planners.

A typical example: a family of four from Germany wanting to visit Bali island - first they look at the airfares. And Singapore Airlines gives a good price (normally lower than Lufthansa, BA) plus a free stopover in Singapore. Why not? For years, Singapore Airlines along with the government cross-promotes and subsidies in one way or another, because eventually the country earns. But many other Asean countries with their flagship airlines such as Malaysia Airlines (MH) and Thai Airways (TG) will quote a "surcharge" for doing a stopover that is clearly acceptable! Therefore, travellers will bypass this chance of a stopover. Alas: The potential earnings for the taxi, transport, hotel, food, parks industry is lost.

Over 1.1 million visitors arrive in July - a 24% increase year-on-year. Imagine, in percentage wise, that is a quarter of the residents of Singapore. Imagine a quarter of another country - bringing disposable income aka tourist dollars? Malaysia's population - 24 million. A quarter is 6 million visitors. On average a tourist could be spending 100 dollars per day - of local currency, so say, 100 Singapore dollars, or 100 Ringgit for Malaysia. And with an average stay of 5 days. Every other nation is envious of such a high rate of tourist arrivals!

So with the Integrated Genting Singapore Resort, Singtel F1 Night Race, and year end holidays (more and more travellers!!), will trickle and tickle customers to the easily accessible casino. There are free buses. Or MRT. Or taxi. Just say 10 dollars to get there in 20-30 minutes. Hop on and hop off.

China tourists doubled to over 130 thousand. Traditionally: This is a group that has high propensity to consume, and gamble. Full Year 2010 revenue is expected to be close to 10 times of 2009. Essentially paying back the cost of the casino and resort in 2-3 years!

1 comment:

  1. Please kindly read my newer articles. I have since revised this target price with better information and analysis. Comments and suggestions welcome.


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