Inside Asian Gaming

INSIDE ASIAN GAMING | May 2008 32 Starting this month, Inside Asian Gaming brings readers a regular snapshot of Asian gaming stock trends via ESL’s Gaming Indices. ESL, the creator of the indices, is an Asia-focused online and interactive gaming company. Its services include management and marketing of online casino and poker rooms, live videostream gaming and mobile and sports betting. Two ESL indices will be featured every month in IAG: the Asian Gaming Index (AGI) and the Global Gaming Index (GGI). ESL has also created several other indices charting the market movements of gaming stocks in other specific sectors. Inside Asian Gaming points out that the publication of the indices and the accompanying commentary is not an endorsement of any particular stock nor a solicitation to purchase any such stock. Neither ESL nor its employees, parent company, associated businesses and agents, nor IAG, its employees and its publisher accept any responsibility for any financial losses or other liability incurred by any person taking a position in such stock. ESL Asian Gaming Index (AGI) Some of the best valuation opportunities in Asian gaming stocks recently have come from smaller cap companies trading under value. This undervaluation has little to do with underlying potential and a lot more to do with general market sentiment tied to the credit crunch caused by the US sub-prime mortgage market. ESL Gaming Indices Legal gaming in Asia is still in its infancy, both in the land-based and online format, and a lot of people are likely to make a lot of money from it in the coming years. Those investors who watched and waited during recent gaming company IPOs, but are considering buying now, are likely to be rewarded with value and excellent growth when markets recover their confidence. For Asia-facing gaming firms that were already well capitalised and had benefited from an equities windfall during more bullish times, even the short-term picture looks quite positive. That sort of resilience has been a trademark of Genting Berhad . The investment and management holding company for Genting Group, with diverse interests in casino resort management, casino resort development, cruise operation, plantations and real estate, has performed well in the year to date, showing a 2.4% rise in its share price in the last 30 days after a bumpy 12 months that saw nearly a quarter of its value wiped out. The company has been praised by bankers for the profitability of the group’s Malaysian casino and entertainment park property Genting Highlands Resort.It is,however, arguably in a regulatory and demographic cul-de-sac in its home market of Malaysia, where the majority of the population is Muslim and barred from visiting casinos. Genting Berhad has instead been positioning itself in new markets in anticipation of the huge revenue potential from Asian gaming consumers. Genting International PLC , the group’s international project developer, is currently working on the Resorts World at Sentosa casino resort in Singapore (due to open in 2010). It also showed a welcome recovery, up 4.3% after falls of just under 30% in the previous 12 months according to data gathered for the ESL index. Some of the initial falls were probably linked to bearish sentiment around Singapore-based development schemes following rises in project costs linked to commodity inflation. For any long term investor in the Asian gaming market, buying back into GIL is likely to be an attractive option, especially after GIL’s parent Genting Berhad announced its potential involvement in a US$15 billion casino and entertainment city at Manila Bay in the Philippines. Analysts have, though, expressed some reservations about the robustness of the ROI model for GIL’s casino resort in Singapore, given that the government there has placed restrictions on the amount of gaming space and the number of tables and slots allowed on site. Prices for Tencent Holdings stock are less immediately attractive after gains of 84.7% in the last year, and a whopping 23.8% rise in the 30 days to 21st April alone. Nonetheless for anyone thinking they ESL Asian Gaming Index (AGI) Last Price 1339 High 10/30/07 1700 Low 03/20/08 1246 Last 12 Months -7.45% 900 1000 1100 1200 1300 1400 1500 1600 1700 1800 Oct 2006 Nov 2006 Dec 2006 Jan 2007 Feb 2007 Mar 2007 Apr 2007 Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2007 Jun 2007 Jul 2007 Aug 2007 Sep 2007 Oct 2007 Nov 2007 Dec 2007 Last 12 Months Top/Bottom 10 Performers in ESL AGI Asian Gaming Index Period 12 Months Average Return 5.93 Base Currency USD Sino Strategic PacificNet Inc Vodone Ltd CY Foundation Odyssey Gaming Mark Sensing Abilty Corp Two Way Ltd Esun Holdings AGTech Holdings Manila Jockey Club Astro Corp Tencent Holdings Comtec Systems China Vanguard Galileo Holdings Advani Hotels Prime Gaming Berjaya Corp Bhd Berjaya Land 585% 195% 179% 179% 136% 103% 88% 75% 70% 61% -57% -59% -62% -63% -66% -67% -68% -70% -72% -81% Last Month Top/Bottom 10 Performers in ESL AGI Asian Gaming Index Period 1 Month Average Return 5.93 Base Currency USD PacificNet Inc Dore Holdings Mark Sensing Progressive Gaming Abilit Corp Royal International Adores Galaxy Ent Vodone Ltd CY Foundation Dreamgate Corp The9 Ltd-ADR RTG Ventures Keihanshin R/E Esun Holdings Tencent Holdings Astro Corp AGTech Holdings Two Way Limited Sino Strategic -38% -33% -24% -24% -22% -17% -16% -11% -10% -9% 16% 16% 16% 23% 32% 35% 45% 46% 48% 68% ESL Gaming Indices