KUALA LUMPUR: Only World Group’s (OWG) FY18 earnings remain underwhelming, says AmInvestment Research as it kept its hold recommendation with a lower fair value of RM1.01 a share from RM1.39.
It said on Tuesday it had trimmed its earnings for FY19 and FY20 by 28% and 19%, respectively as it factored in lower margin assumptions.
“Our fair value is based on a price-to-earnings (PE) of 16.5 times EPS,” it said.
AmInvest Research said while it liked OWG for its exciting growth prospects and consumer-driven theme, the uncertainty surrounding the actualisation of the Twentieth Century Fox World theme park that is expected to improve visitor numbers clouds its earnings visibility.
“Key risks to OWG include a decline in visitors and a delay in the opening of the Twentieth Century Fox World theme park in Genting,” it said.
To recap, OWG posted 4QFY18 earnings of RM31,000 (QoQ: -77%; YoY: 13%), bringing FY18 earnings to RM6.4mil (YoY: 17%).
“The results are below our and consensus expectations at 55% and 58% of full-year estimates respectively,” it said.
The research house noted that topline for the quarter grew 7.2% QoQ due to the full quarter impact from the opening of four new family attractions at SkyAvenue, Genting Highlands and two new family attractions at the TOP, KOMTAR Tower, Penang.
OWG also rolled out promotional initiatives in line with school holidays and promotional pricing in tandem with the abolishment of the GST.
The FY18 revenue grew by 13% YoY due to the full-year impact from the new family attractions at the TOP, Komtar as wellas the commencement of new retails outlets at SkyAvenue, Genting Highlands.
However, this was partially offset by a 30% YoY contraction in the food service outlets (FSOs) revenue which was caused by the closure of FSOs at First World Plaza, Genting Highland in tandem with the ongoing Genting Integrated Tourism Plan (GITP).
FY18 PBT margin improved marginally by 0.7ppt YoY as PBT surged 25.7% driven mainly by its amusement and recreation operation segment’s earnings which more than doubled. However, this was offset by an earnings contraction of circa 84% for its FSO segment due to high overhead costs on the segment’s lower revenue.