Trading Room – Wed 7th Nov 2018
Another group of investor’s favourites, the Genting group companies were hit by sell-downs on high volume last Monday in the aftermath of the Budget 2019 announced on Friday the week before.
As it turned out, Budget 2019 announced on Nov 2, 2018 was a negative surprise for the gaming sector, as both casinos and number forecast operators (NFOs) were not spared.
According to an analyst report, casino license fee will be raised to RM150m from RM120m p.a. while casino duty rate will be raised to 35% from 25% of gross gaming revenue and the number of special draws will be halved (for NFOs).
The casino license fee and duty rate hike are the largest on record according to the report.
And the report cut the fair value for Genting Malaysia to RM4.40 from RM5.70 (which did not save the stock from being sold down) and RM11.55 to RM10.90 for Genting (which also did not save the stock from being sold down).
For elite traders, the tell-tale signs on both stocks were already apparent before Budget 2019 as both stocks were already in a downward spiral and broke their critical levels.
The selldown after Budget 2019 is just a “continuing of the dominant trend” as they say.
We like both Genting and Genting Malaysia for trading as they are consensus stocks that are well tracked by analysts and also institutional funds.
Both companies have solid businesses and brand names and as the target prices by the report imply, both stocks are still well-liked by the investment community and deemed to be “undervalued”.
But as we know, analyst reports do not get it right all the time.
However, what may be a bane for them is now a tremendous opportunity for traders.
The rise in volume, volatility and momentum are always attractive for elite traders as they give clearer and more precise levels to define our risk and reward on a stock.
What could be an elite trader’s trading plan towards Genting and Genting Malaysia?
Both stocks current (sold-down) prices are way below their fair value.
Should one buy into Genting and Genting Malaysia its current price juncture or has the environment changed for them?
In fact, both companies may have fallen into a new trend that has characterised the same type of stocks recently.
Unnoticed by some but well tracked by our Master Algorithm across the breadth and depth of the market, the market now seemed to treat these new phenomenon group companies differently.
As elite traders, we are always fascinated by correlation and diversification that exist across the market, a trend that could only be tracked clearly and on a timely basis using big data algorithm analysis.
What could one expect from the share price trend of Genting and Genting Malaysia in the short and long term?
The answer is actually very clear.
Should you actually buy the two stocks now after the selldown or will they actually become cheaper?
Both the stocks have good target levels in our view and is thus attractive given the projected reward to risk ratio.
Taking into account the new phenomenon, the sell-downs on the companies’ shares and using the combined power of the Master Algorithm and Hunting Sheet, we are targeting several high-probability key critical price levels to take advantage of the current movement in the stock price of the two companies.
These levels are projected in advance for us to enter the stocks (on intra-day basis) and are adjusted dynamically (moving along with the market).
Genting closed at RM6.74 on Mon (from RM7.20 the day before) after falling to a low of RM6.35 on the day.
Genting Malaysia closed at RM3.61 on Mon (from RM4.54 the day before) after falling to a low of RM3.18 on the day.
A key unusual factor on Genting Malaysia needs to be weighed heavily by traders before entry.
And watch how their share prices will eventually behave in line with the new phenomenon group mentioned.
It’s a key new trend that serious traders should not be unaware of.