Why I divested Genting and never looked back (nor regretted)

I gambled (and won't do it again)
I once dipped my feet into Genting Singapore. I bought one lot when it was at 52 weeks low, hoping to gamble my way through and make a quick profit when it bounces back.

But it never did.

I did my basic assessment. Balance sheet was not bad (huge cash position). There's prospect in Japan and Jeju (Korea) for the Company. Jurong's Hotel is opening soon. I convinced myself that "everything is going to be fine".

Yet, i've forgotten that this is a Company about gambling after all.

And I gambled my money away in this stock. > 20% loss suffered.

Why was it bad?
The business is divided into two main segments - Gaming, Non-gaming.

Gaming
It all depends on two huge factors - gamblers (mainly foreign Chinese) volume + Casino Win rate.

Know that the tourism industry is sort of cyclical. There'll always be peaks and troughs. What's worse is the tightening of the Chinese Government in cracking down corruption back home that affected rich travellers from coming down to Singapore (they've to lay low).

This spells trouble.

Next, Genting has a serious issue - a defunct credit policy. Bad Debt expenses has been climbing quarter on quarter, presumably to reel in VIP gamblers from MBS in order to gain market share. But what good does having a larger market share does when you cannot collect the cash from your debtors? During one of their earlier results announcement, management even tried to fool investors by saying that "higher bad debt expenses were a result of prudence and accounting requirements", and something along the line of "we expect such provisions to be reversed in the near future".

Being from an accounting background, this statement is merely a smokescreen. Auditors would never allow management to over provide for bad debts. There must be concrete evidence showing that the debts cannot be recovered for such provisions to be booked in.

Win-rate ratio plays a huge part in determining Casino's profit. In quarters where Genting win-rate ratio dipped lower than the average, their profits suffered accordingly.

Isn't this equivalent to gambling? Your investment is based on pure luck. 

This isn't something I would be ever comfortable with.

Non-Gaming

Mainly derived from Hotels and Entertainment (USS, Oceanarium, Adventure cove etc).
These, again, are cyclical. Highly dependant on tourist arrivals in Singapore. But still, slightly more predictable than the Gaming segment. Unfortunately, the non-gaming segment only makes up less than a quarter of Genting's revenue.

I was glad that, after analysing the business model of Genting again, I decided to cut my losses and set myself free and few months ago.

Last notes
Oh, oh, oh. Japan's expansion seems to be facing a huge obstacle.
Jeju's project seems to be stuttering as well. Doesn't seemed too good for me, eh..?

Looks like I may be too pessimistic and spreading too much fear on Genting.
But I wasn't ready to gamble. I wasn't intending to gamble. I'm not gambling my money away.