Genting Malaysia (4715), a crisis or opportunity? (Part 3)

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Is GENM a good buy now?

As a value investor, I only invest in a company if the company is cheap enough.

So, how do we define whether the company is cheap enough?

Normally, i will use P/E to come out with the reasonable price of the company, to determine whether it's overvalued or undervalued.

P/E ratio
Historical Average P/E (5 years): 12.93x
Industry P/E: 19.7x (based on TA Research Report @ 28/2/2020)
CAGR + DY: 12.72x

GENM's P/E on 21 April 2020 is 10x. Compare to historical, industry P/E and CAGR+DY, the current P/E is considered low. However, after factor in the earnings affected due to Covid-19, the current P/E is reasonable. Hence, it share price is not really attractive at the moment.


I have roughly calculated the EPS for 2020. I have estimated GENM's business will reduce for 6 months after the lockdown due to cautious of the Covid-19 virus. And i expect the business will increase on November and December due to school holiday.

Based on the estimated EPS 15.44, times the projected P/E (in prudent, i take 12), the reasonable price should be RM1.85. I apply 20% of margin of safety to its reasonable price, GENM's share price can be considered very attractive if it drop to RM1.48.

However, as the Group has strong financial background, consistent revenue, and competitive advantage (GENM is the only company that granted Casino license in Malaysia), it is unlikely GENM will drop to that low. Hence, investor is encouraged to build the position in different price level, and purchase more when the price is low.

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