Genting HK

Genting HK: (US$0.36) Monetizing stake in NCL; trades at significant discount to stub valuation
Genting HK has proposed to divest 10m shares (4.4% stake) in Norwegian Cruise Lines (NCL) to Goldman Sachs for a net consideration of US$546.1m. Post sale, group's stake in NCL will fall from 22% to 17.7%

The net sale price of US$54.61 per NCL share is almost par with its last closing price of US$54.78, and translates to a historical P/E of 27.2x and P/B of 3.6x.

The group is expected to realise a capital gain of US$389.3m (US$0.048/share) from the disposal and an one-off accounting gain of US$1,688.5m (US$0.21/share) from the revaluation of its remaining NCL shares in its books. This would boost its net cash position to US$790m (US$0.98/share) and raise its pro forma FY14 NAV/share by 65% to US$0.656.

Based on the sale price, Genting HK's stake in NCL is worth US$2.76b, which almost equates to the group's market cap of US$2.89b, implying that investors are getting the rest of its other businesses (Crystal Cruises, Star Cruise, 45% stake in Travellers currently worth US$1b, 6.6% in Echo Australia) for just US$13m.

At the current price, Genting HK trades at a significant 45% discount to its post sale book value. The cash rich leisure stock currently sits in Market Insight's Value portfolio.