Steven Romick slashed 15,312,690 shares of Genting (XKLS:4715, Financial) from his portfolio at an average price of 4.43 Malaysian ringgit ($1.10) in the second quarter. The trade had a -0.19% impact on Romick’s portfolio. He now owns 41,441,930 shares in the company.
Genting is a leisure and hospitality company that offers casinos, hotels and spas, restaurants and bars, as well as shows and events, and movie theaters. The company was incorporated on May 7, 1980, and has locations in Singapore, Malaysia, the Philippines and New York City.
Genting has a market cap of 24.95 billion ringgit, an enterprise value of 24.57 billion ringgit, a price-earnings (P/E) ratio of 22.95 and a price-book (P/B) ratio of 1.37.
According to GuruFocus, Genting has a 7 of 10 financial rating with an Altman Z-Score of 2.49 indicating that it is in some kind of financial stress. Genting has a 7 of 10 profitability and growth rating with an operating margin of 15.54%, an ROC (Joel Greenblatt (Trades, Portfolio)) rating of 14.26, and its EPS growth over the previous 3 years is -3.60%, ranking it beneath 60% of the 531 companies in the global resorts and casinos industry.
GuruFocus gives Genting three severe warning signs that may have impacted Romick's decision.
- The company’s gross margin has been in long-term average decline of -5.6% per year.
- The company’s operating margin has been in five-year decline at an average rate of 9.9% per year.
- The company’s asset growth is faster than its revenue growth: If a company builds asset at 12.1% a year faster than its revenue growth rate of 6.6% over the previous 5 years, it means that the company may be getting less efficient.
Additionally, Genting’s revenue per share has not increased since March 28, 2014 when it was $1.50 per share. As of March 28 the company’s revenue per share had not increased and it remained at 1.50 per share.
Below is a Peter Lynch chart that shows Genting is trading above its intrinsic value
Romick is a bottom-up, defensive investor, who has won multiple awards managing his FPA Crescent Fund. Since its inception in 1994, the fund has returned an estimated 10.2% which marginally outperforms the Standard & Poor's 500.
Cheers to your investment success!
Disclosure:Â Author does not own any shares of this company.
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