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Friday, December 18, 2015

CIMB Research sees Komtar theme park boosting Only World Group

KUALA LUMPUR: CIMB Equities Research expects Only World Group’s (OWG) share price to be given a boost from the proposed theme park at Komtar in Penang.
The research house said on Friday it visited Komtar recently for a progress update on the state of launch readiness.
Its earlier expectation was for a launch in two phases, which were December 2015 and February 2016.
“It appears that this has now been changed to a single grand launch on April 1, 2016 so that the project becomes a single coherent destination where all attractions and destinations are ready. As a result, we lower our FY16 EPS by 10% to account for the delay,” it said.
CIMB Research said although Komtar will be launched on a single date, the various components are still targeted to be completed in two phases.
In phase one (end-January 2016), the themed attractions 1) I Love Penang gallery, 2) Doraemon, 3) Haunted House, 4) 5D Sea Explorer and 6) Playoke will be completed.
In phase 2 (mid-Feb 16), 1) Jurassic Park, 2) Zodiac Park, 3) Mirror Maze, 4) Milliondollar Carousel and 7D Planetarium Dome will be ready.
“Our current assumption of a blended ticket rate of RM15 (@1m visitors per annum) for the observation deck is conservative. Based on comparative pricing for tickets in KL Tower and Petronas Twin Towers, Komtar could potentially earn a blended ticket rate of RM40.
“This would lift our FY16-18 EPS forecasts by 11-46% and could raise our share price valuation to RM6.95.
“We have not imputed any revenue and profit contributions from the themed attractions at Komtar in our forecasts as ticket prices have not yet been finalised,” it said.
CIMB Research said based on OWG’s historical ticket prices in Genting Highlands, an average RM30 a ticket is not unreasonable.
At pretax margin of 30%, the themed attractions division could lift FY16- 18F EPS by 10-25% and could raise our share price valuation to RM6.03.
“Komtar opening could lift OWG to RM8 If we include the upside potential both from higher ticket prices and the themed attractions, our FY16-18F EPS could rise by 16%-71%, which could lift our share price valuation to RM8.
“As with all construction projects, the biggest risk to our earnings projections is further delays in the launch of Komtar,” it added.

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