RESORTS World Bhd seems to be regaining the favour of investors after the recent selldown of its shares, following its announcement of a related-party acquisition, involving a 10% stake in Walker Digital Gaming LLC (WDG) and a 100% of Digital Tree for US$69mil, late last month.
Its share price has been beaten down to an attractive valuation that it is currently trading at an undemanding price/earnings ratio of about eight times; hence, an opportune time to begin accumulating the defensive stock.
Resorts was one of the most actively traded stocks over the week and analysts believe there is further upside for the counter, particularly in this window-dressing season.
The company on Wednesday announced to Bursa Malaysia that it had completed its proposed acquisition of WDG and Digital Tree. The company is currently scouting for more gaming-related acquisition opportunities in Macau and Las Vegas in the United States.
Given its robust net cash position, Resorts could easily afford to go on a shopping spree for good deals. By the end of the year, Resorts’ cash pile is expected to reach RM5bil.
Against the backdrop of a challenging economic environment, Resorts’ earnings have remained fairly stable and resilient. For the nine months ended September 2008, the company posted a net profit of around RM1bil (-15.6% year-on-year) on revenue of RM3.6bil (+10.8% y-o-y).
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