SGR has been embroiled in controversy over the last 18 months falling from ~$3 down to just 99c last week, however we question, has the baby been thrown out with the bathwater? While earnings have been under pressure with fines and regulatory restrictions hampering operations, we can’t lose sight of the value of their underlying assets, which are worth more than the current share price implies. As we saw when Blackstone bought Crown, an unlisted investor would be a “natural owner” of these irreplaceable assets.
After the stocks tumbled by more than 75% we believe value has certainly returned. It’s a contrarian call but we believe that SGR will trade higher through the 2H.
- We believe the next 20-30% move for SGR is on the upside which provides attractive risk/reward in our opinion.
MM is bullish toward SGR under $1.20
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