PETALING JAYA: Investor sentiment towards Genting Malaysia Bhd (GenM) is expected to improve as more details emerge on the group’s upcoming outdoor theme park (OTP).
RHB Research said the negative investor overhang towards the stock was also likely to dissipate in view of recent positive financial forecasts by its newly acquired Empire Resorts.
In a note, the research house said it had returned from a tour of the OTP feeling positive, as GenM’s management is confident that the theme park will open by the third quarter (Q3) next year, in line with its expectation.
Maintaining its Buy call on the counter, the research house said it did not discount the possibility of an earlier opening, given thecurrent stage of completion and aggressive hiring of staff in recent months.
On ticketing, it said the various types of
tickets could include annual pass, day pass, priority pass, and pass that includes a VIP tour.
“No final ticket price was guided, but we gather that it should be in line with other regional theme parks, ” it said, noting that the Universal Studio Singapore day pass is priced at RM242 (SG$79).
While the name of the OTP will not be 20th Century Fox World, RHB Research said GenM does not believe this will deter visitors, given its unique propositions.
It added that the is expected to be several Asian-themed rides in the offering to suit the target audience.
Investor sentiment towards GenM had turned negative following recent happenings, including a legal dispute with 20th Century Fox over the OTP.
First, an announcement of higher casino duties during the tabling of Budget 2019 in September last year, had sent the stock tumbling on fears about its impact on the Genting group.
Later in November, 21st Century Fox and Walt Disney Co pulled out of an agreement to allow GenM to build a theme park using the design and intellectual property rights owned by Fox Entertainment Group, LLC.
In July this year, the group reached a settlement on the disputes, which saw GentingM granted a licence to use certain Fox intellectual properties.
Another cause for the negative overhang, was the unpopular related party transaction of acquiring loss-making US-listed Empire Resorts, which the group entered into in August.
HLIB Research, yesterday, tweaked its FY21 forecast upwards by 6.2%
to better reflect the traction gained from the upcoming OTP, saying its previous assumptions had been too conservative.
The brokerage maintained its “hold” call on the counter as well as its target price RM3.38, which is at a 20% discount to its sum-of-parts-derived target price of RM4.21.
“Despite the upcoming OTP slated to launch by Q3’20, 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, ” it said.
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