IKGH,
I am recommending IKGH as a spec play. It is obviously a stock that a person of sound mind wouldn't want to own -- a Macau gambling junket stock -- what worse sector could you choose? Regulatory risk from China, decreasing revenues, dodgy industry (including credit risk), ill-timed acquisitions.
Well, stock is trading at small premium tangible book. I expect earnings of over $0.20 for Q4 (you can kinda figure this out from win rate and rolling chip turnover). And first month of 2015 is not bad, so Q1 will be ok if trend continues. I expect some of these earnings will be paid in dividend or stock buyback. Also, some of the contingent bonus payment liabilities might reverse with the recent chip count declines, so it could be positive core earnings plus some reversal of liabilities. On the other hand, probably some goodwill write-off given how Macau has fallen apart, but I don't value goodwill anyway.
Not bad for a 1.16 stock. I think the stock could appreciate 50-100%. It could also decline 50% on some kind of bad news, but I think the up 50% is more likely.
There is an application to Hong Kong stock exchange. Not sure how that will work out, but not counting on it.
MC |
