Genting - Understanding The Trajectory

Bank of China is reported to have been forced to withdraw from the US$2.5 bln IPO of Macau Sands, due to political pressure. Other Chinese investment banks as well as state-owned corporations (eg the sovereign wealth fund CIC) are also said to be under similar pressure, either as underwriters or as cornerstone investors.

Sheldon Adelson’s firing of 11,000 construction workers when he suspended work on the Cotai project last November, was also cited as a reason. As we had earlier noted, Adelson’s focus on Marina Sands at the expense of Macau augured very well for Singapore. (Adelson is the founder of LA Sands, and Macau Sands and Marina Sands are part of it.)

China’s policy towards Macau has been rather whimsical. Just look at the flip-flop on the visa policy for the mainlanders.

It seems like what is negative for Macau may be good for Singapore’s IR ambitions, and Genting Singapore offers the only direct exposure. This is best reflected in how quickly the 1.18 bln shares or 12.3% sold by the late Lim Goh Tong’s family on May 27th were snapped up, with talk that some or a good part went into the hands of Stanley Ho and related parties. (There has however been no confirmation on this.)

Genting has 9,637,768,746 shares on issue as at end May ’09. KL-listed Genting Bhd remains the largest shareholder with a 54.4% stake.

A total of 3,895 mln shares were traded from May 20th to Jun 30th, during which more than 100 mln shares were traded a day on 8 trading days, totaling 2690 mln shares or 70%. (A whopping 1.73 bln shares were traded on May 27th.) Genting’s share price hit 92 cents on May 26th, just before the share transactions, then dropped to 63 cents on Jun 16th, and has not looked back since, almost doubling to $1.17 yesterday, in under 3 months.

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