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Saturday, August 18, 2018

Yong Tai working hard to sell Encore Melaka shows

Saturday, 18 Aug 2018
by toh kar inn

Group in talks to attract passengers of cruise liner from Singapore

DESPITE securing offtake agreements with travel agents for the sale of one million Encore Melaka tickets, Yong Tai Bhd
image: is not resting on its laurels as it continues to secure new sales.

Additionally, the group is meeting potential buyers and mulling on deploying funds from its sukuk programme to fund the construction of mixed development Terra Square in Impression City, Melaka.

Yong Tai CEO Datuk Wira Boo Kuang Loon tells StarBizWeek that the group is in the midst of finalising agreements with a cruise liner from Singapore to incorporate Encore Melaka shows as part of its tour itinerary.

He says the cruise liner will stop by Melaka four times a week, with about 1,100 to 1,200 passengers per cruise.

“From this figure, we target about 300 to 500 Encore Melaka tickets to be sold. The maiden voyage shall arrive at Melaka’s shores on Sept 3.

“We believe our target to sell one million tickets per annum is achievable, through the tour groups’ offtake tickets, cruise liner and chartered shows,” he says.

Encore Melaka is a 360-degree rotating theatre that seats 2,007, where a 75-minute play depicts the history of Melaka.

There are two shows each day, one at 5.30pm and another at 8.30pm, while chartered shows are held at 2.30pm.

Boo elaborates that chartered shows do not incur additional expenses, save for utilities, as the performers are on payroll with work hours from 1.30pm to 10.30pm.

The theatre opened its doors on July 7, and as of Aug 5, a total 32,413 tickets have been sold. Note that this does not include the offtake agreement tickets by travel agencies.

These tickets were solely derived from online and walk-in sales. The tour groups, who have agreed to take up some one million tickets, will only begin to come in at end-September to early-October.

Recall that Yong Tai had entered into offtake agreements with six local and foreign travel agents for one million tickets over the next three years.

With the upcoming peak holiday season, online travel agent (OTA) sales are expected to be better than July’s numbers.

Bookings for the long weekend over National Day, Hari Raya Haji, school holidays and Singapore public holiday on Oct 9 have hit 40% to 50% take-up rate.

Apart from that, Yong Tai also works with the local Melaka residents, who become ticketing agents. “Most shops in Melaka and Grab drivers are our agents. These agents offer two types of codes for ticket bookings – one for cash and the other for credit card transaction.

“The cash option offers buyers a 15% discount on ticket price and this amount goes to the agent as their commission,” Boo explains.

Tickets for Malaysians are priced from RM128 to RM528 during normal season, and RM148 to RM548 during peak season.

On the other hand, tickets for non-Malaysians are priced from RM148 to RM568 during normal season, and RM168 to RM588 during peak season.

There are three seat categories – standard, premium and VIP. Premium tickets make up 45% of total seats. The upcoming sales and service tax is not applicable to Encore Melaka tickets.

Eventually, Yong Tai plans to embed an Encore Melaka sales portal on travel websites like TripAdvisor and CTrip.

Encore Melaka’s largest target market is China at 40%, followed by Malaysia 30%, Asia-Pacific 20%, and others 10%. It is also noteworthy that China’s peak travel season commences Oct 1, during its National Day holiday.

Melaka remains the second top choice of travel destination in Malaysia after the Klang Valley. In 2017, Chinese tourist arrivals to Melaka grew 23% year-on-year to an estimated 1.65 million, making it the largest group of tourists. Singapore tourists are the second largest group of tourists in Melaka, followed by Indonesia.

ICPS and share price decline

On Aug 1, Yong Tai proposed to accelerate the conversion period of its irredeemable convertible preference shares (ICPS) from Nov 28, 2019, to an earlier date to be determined later.

In a filing with Bursa Malaysia, Yong Tai explained that the initial moratorium of three years for conversion of the ICPS was to mitigate any immediate dilution effect on the company’s earnings per share upon issuance of the ICPS.

It was also expected to coincide with the commencement of operations of the Impression Series Encore Melaka theatre, which was originally targeted to take place in the fourth quarter of 2019.

The Encore Melaka theatre has since been completed more than a year ahead of schedule and commenced operations in July 2018.

With the sale of tickets for Encore Melaka already ongoing, the theatre is already generating income and is expected to provide recurring income to the group, going forward.

As such, the proposed acceleration of the ICPS is to allow ICPS holders to convert their existing ICPS into ordinary shares of Yong Tai, in view that the initial moratorium of three years was originally intended to coincide with the scheduled launch date of the Encore Melaka theatre.

Following this announcement, Yong Tai’s share price saw a swing down, and speculations were abound. Yong Tai’s share price fell 25% from RM1.37 on July 31, to RM1.03 on Aug 7. It picked up the following day, recovering 15.5% to RM1.18.

Boo dismisses rumours of illness or that the major shareholders are selling down.

“There was minimal selling from institutional funds during that period and there could be short-selling activities by other investors,” he says.

Boo elaborates that another consideration taken into account for the early conversion of the ICPS was that Yong Tai would be able to inch closer to the RM1bil market capitalisation threshold. Currently, Yong Tai’s market cap stands at RM543.9mil.

“This will enable the group to attract another category of investors.

“We have had investors, institutional funds mostly, who were keen but unable to invest in Yong Tai due to its market cap not meeting a certain threshold,” says Boo.

Terra Square

The Terra Square project has been temporarily suspended as contractors face tight capital controls from China.

Hence, Boo has been mulling several options to raise funds to complete the construction of Terra Square.

Boo is considering to deploy funds from the recently launched sukuk programme of RM1bil in nominal value.

Then, Boo is also in advanced negotiations with two interested buyers from Singapore and Hong Kong, one being a real estate investment trust (REIT).

Terra Square is a mixed development within the 138-acre Impression City in Melaka. It is positioned next to the Encore Melaka theatre and is designed as a point of commerce and tourism. With over 962,923 sq ft of nett leasable floor space, Terra Square will feature shoplots, linear mall, sports mall, aquarium as well as a four-star hotel on 14.6 acres of land.

Yong Tai has unbilled sales amounting to RM540mil for its developments in Impression City.

“However, given the current property market scenario, we do not want to push for more launches and we reiterate our stance that property development is not our main sector.

“Our primary focus right now is to drive Encore Melaka ticket sales up and secure more avenues to sell those tickets,” says Boo.


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