Genting Malaysia’s earnings forecast revised upwards on outdoor theme park catalyst

21 Oct 2019 / 19:18 H.

PETALING JAYA: Hong Leong Investment Bank Research (HLIB Research) has upgraded Genting Malaysia Bhd’s (GenM) FY21 forecast by 6.2% to reflect the traction gained from the upcoming outdoor theme park (OTP).

The research house said its previous forecast was too conservative, but it is maintaining a “hold” call on GENM with a target price of RM3.38.

GENM is maintaining the targeted launch date of Q3 2020 for the OTP, which HLIB Research said to be relatively conservative.

“Despite the upcoming OTP slated to launch by 3Q20, we maintain our discount to reflect the uncertainties of the turnaround plans for the acquisition of Empire which will be hampering earnings beginning next year.”

The OTP will have an estimated capacity of 10,000 visitors per day and we gather that there will be initiatives to better manage the crowd and reduce the duration of physical queues for rides which could typically take up to several hours.

The composition will consist of family-friendly rides making up for 60% of all rides and attractions. The OTP will also include 11 food kiosks and seven restaurants from reputable franchises.”

The research house said the OTP will house over 20 rides and attractions with most of its intellectual properties (IP) to likely remain Fox-themed, while other potential IPs will cater to the Asian market.

“The OTP will span across 26 acres of land, with the option to expand additional space in the future to house a new theme and additional rides.”

HLIB Research said that the prices are still to be determined and that it will be benchmarked against other theme parks of similar calibre.

“We expect it to be priced around RM200/day pass after benchmarking it to Universal Studios Singapore. Additional passes will also be sold e.g. express lane passes and annual passes (typically priced at 2.7 times day passes).”

Meanwhile, the royalties required for the group to pay for running the OTP IPs remain confidential.

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