Sunday, October 14, 2012

stok tots: bloom - a back-of-the-bus-ticket analysis (bloom, 14 oct 2012)

bloom has been going up in price since its macd gave a buy signal on 12 sept 2012 .. from a closing price of 10 pesos to 13.20 last friday (12 oct) .. or a 32% price increase in just exactly 1 month. traders have attributed the price increase to the upbeat mood in expectation of a 1st quarter 2013 opening of its hotel/casino operation in the pagcor entertainment city by the manila bay area.

technically, bloom's price action and indicators continue to look bullish after 1 month, its macd still pointing north and both rsi and sts above the overbot levels of 70% and 80% respectively ...

with bloom now trading at 13.20 pesos  .. im just curious how it is doing in terms of fundamentals .. or .. in the absence of casino revenues at the moment, its present valuation vis-a-vis future possible income stream  ... ill be doing my favorite fundamental valuation technique: a back of the bus-ticket analysis ...

as bloom has at present no income yet .. ill be using agi as basis for proxy figures. in morgan stanley's 3 august 2012 primer on the philippine gaming sector, agi's presently 50% owned traveller's International which owns resorts world manila near naia has 300 tables and 1,600 slot machines. solaire manila, bloomberry's casino/hotel to open on the 1Q of 2013 ...  will also have 300 tables but with fewer slot machines at 1,200. in 2011, traveller's international generated for agi a net income of 2.4 billion pesos, making resort's worlds net income for 2011 at 4.8 billion. assuming bloomberry's 2011 income to be 4.8 billion also, we can compute for bloom's 2011 eps and p/e ...    

a. bloom's total issued and outstanding shares: 10,589,900,556
b. resorts world manila 2011 net income: 4.8 billion pesos
c. assumed bloom 2011 eps: 4.8 B pesos/ 10.6 B shares = 45 cents per share
d. bloom's most recent closing price: 13.20 pesos
e. bloom's 2011 trailing p/e using resort's world manila's net income as proxy = 13.20/.45 = 29.15 x

in comparison, wynn's resorts (WYNN) has a p/e of 22.3 while genting singapore (G13.SI) has a p/e of 19.55.

with a p/e of 19.55 .. bloom should be trading at around 8.85 pesos
with a p/e of 22.30 .. bloom should be trading at 10.10 pesos.

therefore ... at 13.20 ... bloom is trading at a premium compared with the two randomly chosen casino stocks.
tho already trading at a premium (assumed) vis-a-vis other casino stocks, i think bloom still has some potential price action left considering the present gambling mood of pse traders. in this regard .. if i do trade bloom in the coming days .. ill be trading it based on its chart (just carefully considering possible entry points), and not based on valuation.  

see also:

how do i pick stocks to trade (07 sept 2012)
my trading tactics