Rights Issue-Bitter Pills to Swallow?

Rights issues have always been regarded badly by investors. Has there ever been a rights issue that has been warmly welcomed by investors? Investors frown on rights issue because the company wants more money from them. Investors need to think more clearly, the money is in exchange of additional shares. If the investor bought the shares because he/she believed in the story or growth plans of Company A, then why sell when they announce a rights issue? Doesn't the rights issue tie in with the plans?

S$1.5B in the expected funds to be raised. Genting Singapore intends to use approximately 60% of net proceeds raised from the rights issue for funding of future acquisitions and/or investments undertaken by the group. The remaining 40% will be used for working capital purposes and includes repayment of bank borrowings.

In my view, most investors should already know that a rights issue was coming, why was that a surprise? If investors sold because they do not want to cough up more money, okay that is understandable. Looking at the shareholders of Genting Singapore, it looks like the biggest burden will be on Genting Berhad to raise the funds. Genting Singapore is just slapping open its palm for more money and a hot growth story.

The Singapore gaming story has taken on wing over the past few weeks following the much improved gaming industry in Macau, so much so that Sands and Wynn are both quickly thinking of lodging IPOs in HK for their Macau operations. The improved sentiment means improved valuations on Singapore casinos.

This is a minor hiccup, I still see more and more analyst reports upgrading their target pricing from S$1.10-1.20 to the S$1.50 level over the next few months.

So Salavtore Dali continues to be bullish, in spite of swallowing the bitter rights pills. Are you?

Work On, They Must!

Yes, I was at the Giant Hypermarket in Kelana Jaya just three days ago. Even though the Hari Raya festivity is about two weeks away,the hypermarket seems relatively quiet. To me, it is just like the normal crowd on a week-end. Yes, you do hear Hari Raya songs but that was about all. There was no decorations, really. No spirit, so to say.

A sushi maker concentrating on her chores.

A sweeper ready on the double to sweep up a storm....

A butcher cutting meat with a sharp cleaver.

Two fishmongers smiling as they clean fish for customers.

Another fishmonger awaiting customers' instructions.


Another butcher cleaning fats from the meat.


A worker involved in cleaning the frozen vegetable section.


A promoter hard at work producing samples for tasting purposes.


Another worker adding ice to ensure vegetables looks fresh.

A promoter preparing sample yogurt drinks for customers.


A lady worker at the fruit section.

And yet, we see the workers at Giant,hard at work. Most are foreigners and they must work hard, especially in this inflation-hit times. Here you can see some of them, at their posts. For them, it's just a day's pay for a day's work. Nothing more,nothing less.



Look at these shoppers in the Giant Kelana Jaya Mall. Too few at this time, don't you think? Raya is on and yet this is the situation. The recession is biting?

If Only they would produce These this Way!

Yes, they will thoroughly loved it. They will love those inventors and manufacturers who put them into the market. Enjoy!

Woman's Gun

Woman's Car Speedometer


Woman's Mouse

Playing Genting Singapore shares

It’s “game on” as punters come out to play Genting Singapore shares,dicey as it may be.

Some 395 million shares were traded yesterday (10 September 2009)with prices swinging from a low of S$1.08 (RM2.65) at the start of the trading day to a high of S$1.17 by mid-day.

The share price then proceeded to fall again to about S$1.12 before a late rally brought the price up to close at S$1.14, representing a fall of 4.2 per cent from the previous close of S$1.19 per share.

The high trading activity followed news that Genting Singapore was seeking a rights issue at an issue price of S$0.80 for each rights share, on the basis of one rights share for every 5 existing ordinary shares, possibly raising around S$1.6 billion.

As reflected in the price movements yesterday, market reaction to the news has been mixed.

In a note released yesterday, OCBC Investment Research said that given the recent run-up in Genting Singapore’s share price, it believes it may just be a good time to raise some cash as there have been some concerns about the cost overruns at Resorts World at Sentosa as well as its payment of its syndicated loan obligations of S$4 billion in 2011 and its S$450 million convertible bonds in 2012. However, OCBC added: “We think that these concerns may be overwrought. Instead, we see the move as more of an insurance, should there be any hiccups in the global financial system again.”

In view of the possibility of Resorts World at Sentosa opening before year-end and a more upbeat regional economic outlook, it was also adjusting its fair value from S$0.85 to S$1.05 per share. It also raised its FY2010 revenue forecast 11.4 per cent to S$774.7 million and reduced its loss forecast 66.7 per cent to a loss of S$20.7 million.

OCBC said it is maintaining a “hold” rating.

The rights issue took some by surprise

Nomura said in a note: “Given the anticipated strong cash flow from the integrated resort (IR) project, Genting Singapore is not in urgent need of cash, in our view.” It added: “We maintain our view that Genting Singapore’s IR will be a great success. At the S$0.80 per share rights issue price, its enterprise value is roughly about S$17 billion.”

Industry watchers expect the Asian gaming market to grow at a compound annual growth rate (CAGR) of 15.7 per cent for the next five years.

In a report by Dow Jones, Goldman Sachs said: “We think the market may be too optimistic on Singapore gaming demand and the competitive outlook.” It is keeping the stock at “sell”, with a target of S$0.65.

In Malaysia, reaction to the rights issue initially saw investors sell down Genting Bhd, Genting Singapore’s parent. Genting Bhd owns 54 per cent of Genting Singapore and many feared it might have to borrow for its RM2.1 billion (SS$856 million) share of the rights issue.

Having digested the news, however, investors seemed to agree with the majority of the securities houses. Genting shares rose 1.6 per cent yesterday to RM6.97 apiece.

JPMorgan rated the move as “positive” for Genting Bhd as investors “should expect more capital management and rationalisation of assets going forward”. It noted that while Genting Bhd had about RM300 million in spare cash, its subsidiary Genting Malaysia had RM5 billion in excess cash. Its target price for Genting is RM8.50.

Amresearch — the one house that correctly predicted the rights issue before the fact — was even more optimistic, raising Genting Bhd’s fair value to RM8.95 and valuing Genting Singapore, on a discounted cash flow basis, at S$1.28.

Maybank Securities sounded a lone dissenting voice, calling a “sell” on the stock with a fair value of RM5.10. It said that, at current prices, it was trading at 20 times its 2009 earnings, which “is almost as high as its 21 times peak in 2007” while its 18 times discount to its revised net asset value “is unattractive”.

Nor did it think that the Singapore casino would be a success. “Despite repeated assurances, we fear that the earnings outlook for Genting Singapore’s Resorts World at Sentosa may not be as bright as touted,” it said.

The Genting Rights Poser

CASINO developer-operator Genting Singapore has turned again to shareholders to raise $1.63 billion in the second biggest rights issue here so far this year. Unveiling the major cash call yesterday, Genting said its $6.59 billion Resorts World at Sentosa (RWS) is ‘on track, both in terms of project costs and timing, for a soft opening in early 2010′.

The proceeds ‘will strengthen the company’s financials and put the company on a strong position to tap strategic opportunities’, said Genting Singapore’s
managing director, Justin Tan.

However, analysts believe the funds will come in handy after earlier cost overruns at the RWS. The company is offering shareholders one rights share for every five existing shares held at cost of 80 cents apiece. The offer price represents a 32.8 per cent discount to Tuesday’s closing price of $1.19 when it was last traded – a record high. The stock has rallied 70 per cent since the start of July.

This is the second time Genting has sought funds from shareholders in the past two years, after it raised about $2 billion in a rights issue in August 2007. Genting Singapore is a unit of Malaysian gaming giant Genting Berhad, which owns 54 per cent of Genting Singapore. It has pledged to subscribe to one billion rights shares it is entitled to.

Mr Tan said support from banks had been very encouraging despite the uncertainty in the capital markets. About 60 per cent of the proceeds will be used to fund future acquisitions and investments. The funds may also be used to enter joint ventures, strategic collaborations or alliances ‘in areas related to its principal business in the leisure, hospitality and gaming sectors, as and when such opportunities arise’, it said in a statement to the Singapore Exchange.

The remaining funds will be used as working capital, which includes repayment of bank borrowings. The company probably took advantage of the sharp run-up in stock prices to get some money into the kitty,’ said OCBC Research analyst Carey Wong. ‘We see it as an insurance move to cover cost overruns of (RWS) and interest repayments of its huge debt and convertible bonds.’

There have long been concerns about cost overruns for the project. Genting has lifted cost estimates for the resort twice – in November 2007, the price tag for the resort was raised from $5.2 billion to $6 billion due to higher construction costs. Then in February this year, it raised the figure to $6.59 billion. The potential cash infusion of $1.63 billion will ease some pressure from interest payments, given that it is sitting on a $4 billion syndicated loan, analysts said.

Of Genting’s rights issue two years ago, about half, or some $1.19 billion, was used to finance the integrated resort. It also got a $4 billion syndicated credit facility in April last year to finance the resort.

Genting’s latest cash call came as something of a surprise, given that it said in its last statement that additional funding would come from operating cash flows when the complex opens next year. Genting Singapore, Britain’s No. 1 casino operator, may be looking to expand its Asian footprint. Market observers say potential investments on the radar could be Philippines’ Subic Bay, as well as in Macau.

Earlier in May, the Lim family which owns the Kuala Lumpur-listed flagship firm stunned the market by selling its entire 9 per cent stake in Genting Singapore for $615 million.

It was offloaded to institutions in a private placement at about 72 cents a share, representing a 16 per cent discount to the previous day’s closing price of 86.5 cents.

DBS Bank and CIMB Bank are arranging the offer. The issue will be fully underwritten by the two banks, as well as JPMorgan, RBS, CLSA, Deutsche Bank, HSBC and UBS.

The provisional allotments of rights shares may be accepted, and applications for excess rights shares may be made commencing from Sept 28 to Oct 12.

CapitaLand mounted the biggest rights issue so far this year, raising $1.84 billion in an offer announced in February.

So, Genting singapore shareholders, can you quickly pony up the funds?

[The source is from the Singapore Straits Times – 10th September 2009]

A Swallow's Grief!

Humans may think they are the only
ones who love, care, suffer loss. Look
at this and you may change your thinking....


Swallows:
Here his mate is injured and the condition is fatal.
She was hit by a car as she swooped low across the road.


Here he brought her food and attended to her with love and compassion..


He brought her food again but was shocked to find her dead.

He tried to move her ... a rarely-seen effort for swallows!


Aware that his sweetheart is dead and will never come back to him again, He cries with adoring love...


He stood beside her, saddened of her death.


Finally aware she would never return to him, he
Stood beside her body with sadness and sorrow.

Millions of people were touched after seeing these photos in America and Europe and even India . The photographer sold these pictures for a nominal fee to the most famous newspaper in France .

All copies of that edition were sold out on the day these pictures were published.

And many people think animals don't have a brain or feelings?

You have just witnessed Love and Sorrow ... Felt by God's creatures.

Be Weary of the Worrisome W

Singapore's Finance Minister,Tharman Shanmugaratnam cautioned Singaporeans to be prepared for the possibility of a sluggish world economy or even a double-dip recession in 2010.

He pointed out that improvements in the United States economy and around the world were mainly driven by aggressive government stimulus packages and a correction in private sector inventories.According to him, there is yet to be a firm or sustainable rebound in private spending that can underpin global economic growth in 2010 and beyond. As such,he advised that the nation should be cautiously optimistic about the economy in the next few years, both globally and in Singapore.

A double-dip recession — also known as W-shaped — refers to an economy pulled out of recession by a short period of growth but which then slides back into negative growth.

Singapore’s gross domestic product grew 20.7 per cent in the second quarter compared with the first, signaling a rebound in the economy after four consecutive quarters of decline. However,the Government has forecasted that the economy will still shrink by 4 to 6 per cent over the full year.

Tharman said that although the asset management industry’s portfolio declined in value by 26 per cent to S$864 billion (RM2.1 billion) in 2008 from a year earlier, fund flows have resumed. In the first half of this year, the assets under management of the 20 largest asset managers in Singapore grew by 23 per cent. Also, the corporate debt market only shrank by 2 per cent to S$168 billion last year.

A review of what caused the economy to be buoyant must be studied. How much of this is generated by the generic drug industry and how much by other pillars of the economy? Is the structural underpinning sustainable?