Tuesday, September 28, 2010

Market Update and MGM

We're at the point of time now which I feel the market has probably gone up a little too much and is due for a slight retracement. Let's take a close look at both the Dow Jones Industrial and Hang Seng Index to have a better feel of things to come.

Dow Jones Industrial Index
The US market has completed a spectacular September month, rallying from approximately 10,000 points to the current level of 10,800. In this month it also forms 3 higher highs. Although it has rallied quite a fair bit, I believe there might be still a little bit more of upside possibility. Strong resistance should come at approximately near the 11,000 mark.

Hang Seng Index
Switching over to the Hang Seng Index (which is usually the key measurement for Asian markets for me), it has already reach a resistance level at 22,400. Even if it goes up, the next strong resistance level will be at approx 22,550 level and I don't really feel it makes much sense to gamble on such a small gain.

Looking at both US and asian market, it seems a good time now to sit back, relax and wait for a retracement before entering the market again. Most of the good counters seems to be overly bought and doesn't offer any value now. At the moment of me typing this post, the general asian market has tanked today and Moody's looking at the possibility of downgrading Spain's rating. Doesn't look very bright for Europe side either.

MGM Resorts International
Wow wow this counter flew yesterday, moving up a whooping 5.44%. At one point during the day, it was up more than 7%. This comes amidst news that MGM Resorts is seeking to list her Macau casinos. Read more about it from MarketWatch here. Although this is not really new news, I'm happy that it still has enough effect on this counter.

Wednesday, September 22, 2010

NYSE : MGM Resort International Inc

NYSE : MGM Resort International Inc
It's a real pity we cut stop MGM the last round when it drop. As I said before, I'm very bullish about the gaming industry and it is for all to see that LVS, SJM and Genting went up alot in the recent months. MGM is one of the most heavily shorted counters in NYSE. Although MGM's performance is nowhere near the rest, I strongly believe it's at a very attractive price still and there is plenty of room to go up.

Recent few days performance has outperform LVS (which I feel isn't alot of upside potential now). MGM has broken it's recent downward trendline yesterday with a strong 8% gain. With this gain, it also forms a higher high and I believe this counter should start a gentle uptrend soon.

Entry price : US$10.73
Cut loss price : US$8.92
Target price : Approx US$12.50 (there is potential to be more)

Tuesday, September 21, 2010

NASDAQ : Rick's Cabaret International

Rick's Cabaret International (RICK)
Rick's Cabaret International is a company that operates upscale gentlemen's clubs and restaurants. They have been making some decent profits at the first half of the year. The 3Q result was just released and it's a little disappointing. For the 3Q, the company made just approx $850,000 or $0.09 per share. This is actually less than half of the profits from a year ago. However, the year-to-date profit of $4.58mil is an improvement comparing to 2009's $3.41mil for the first 9 months.

The stock has came down a long way since March 2010 from $16 to the current value of approx $7. I value this stock for 3 main reasons :
- it's a profit making company and is actively acquiring lots of smaller clubs recently
- it has a pretty healthy balance sheet and I believe the company will be fairing much better as the economy recovers
- this industry has a pretty high bearer of entry and I don't foresee much of the competition that can compare with Rick's

Technically, the counter has broken the downward trendline. I believe this counter should start to move uptrend instead of the downtrend over the past 6 months. This could be a mid-long term counter and I'm prepared to hold it for a while.

Entry point : Now (whatever price below US$7)
Cut-loss : Approx US$6

*Note : This is a company that operated within a "sinful" industry. To put it blatantly, Rick's operated strip clubs so if it's against your morale principles to deal with anything "unethical", please avoid this counter.

Saturday, September 18, 2010

SGX : Genting Hong Kong Limited

Was chatting with an old time friend today about some of the counters he's been looking at. Thing is, he's more into long term investing while I'm more into short-term trading. Anyhow, it's always nice to be able to learn more about any good counters.

The past 1-2 weeks have been the weeks for Genting Hong Kong Limited. The share price have rocketed from $0.31 to $0.51 and volume have been at an all time high. As I usually do not like looking at penny stock counters, I must admit I've completely let this one slip off the hook.

So a little bit of digging research done over the weekend yields this :
- Company owns 3 main businesses : Star Cruises - AP, 50% Norwegian Cruise Lines (NCL) and 50% Resort World Manila (RWM).
- The real potential of this company is RWM which is opened only in Aug 2009 and is currently only 55% completed.
- To date, only 200 tables and 1200 slot machines are operational in the casino. RWM has license to operate up to 2000 tables and 7000 slot machines. RWS have 530 tables and 1300 slot machines.
- Total cost of developing RWM is estimated to be US$550mil comparing to RWS initial estimate of S$5.2bil.
- Profit of RWM for last quarter ending June is approx US$10mil. Profit for RWS for last quarter ending June is approx S$390mil.

RWM definitely has the potential to be very successful once they are fully operational if they can fill up the tables. The initial development cost is a fraction compared to RWS and I think RWM have a pretty strong call to break even before RWS does. Genting Hong Kong Limited is definitely a new counter I'm going to monitor. I believe it will not be a penny stock in the near future.

Friday, September 17, 2010

Recap and Pointers for the upcoming week(s)

It's been a while since anything worth blogging is happening in the market. I've some points to note down for recap and a brief outlook on next week.

Some time around the 3rd week of August, there were some little concerns about the market doing a double dip. I actually wrote a point about the US market probably not going to drop by too much. You may read about the analysis here. The US market is actually up for a consecutive week now so all is good.

I've still had an open position for Ezra which we've bought recently. Do take note there is a 1 for 5 rights issue for this counter. Please exercise the right to buy the additional shares at $1.18. That should bring our average price for Ezra to about $1.71.

China property prices has gone crazy yet again despite the government tightening. You should be able to find plenty of reports confirming the sudden rise in prices in September again. Probably due to the pent up frustration during the "seventh" month... who knows? Here's one such article. I foresee the Chinese government coming in with further tightening actions soon if the trend continues. As such, I'm not going to touch property counters for the time being. In fact, I just advised a friend to sell of his Yanlord shares. There should be very limited upside and we're better off investing in other more exciting stuff.

So what are the exciting stuff? Gaming counters of course!

Las Vegas Sands, Genting International and SJM Holdings have all rocketed quite a fair bit recently. Results have been nothing short of spectacular. Ok maybe not so spectacular for LVS but seeing the result of RWS, I think there's alot of potential for LVS to be in the black this coming quarter. I'm also monitoring some other retail counters as well as a little bit of a sinful stocks. Will post it up when the opportunity arises.

Coming next week.....

Hang Seng is currently trading near resistance level. 21,805 points was the recent high and the market is near this level.

Straits Times index also seems like there's going to be limited upside, probably facing strong resistance near the 3,100 level.

Looks like if you guys have any counters that is in-the-money now can consider taking some profits. I believe the market is due for a small dip soon and that's when we'll look to enter again.