Only World Group to gain from Genting settlement with 21st Century Fox
KUCHING: In view of Genting Malaysia’s settlement with Twenty First Century Fox Inc (21st Century Fox), analysts are more optimistic on Only World Group Bhd (Only World).
AmInvestment Bank Bhd (AmInvestment Bank) in a report yesterday increased its financial year 2021 forecast (FY21F) earnings for Only World Group by 21 per cent as it anticipates higher foot traffic in its Genting operations spurred by the anticipated opening of Genting’s outdoor theme park.
However, we cut our earnings forecasts for FY19F from a core net profit of RM2.9 million – after excluding one-off tax allowance gain of RM12.6 million – to a loss of RM5.4 million as we account for the loss of RM5.7 million in 3QFY19 mainly on the back of lower business volume in its The Top, Komtar Tower operations.
Genting Malaysia announced that the group has entered into a settlement agreement with 21st Century Fox and The Walt Disney Company.
As part of the settlement terms, Genting Malaysia was granted a licence to use certain Fox intellectual properties.
Genting Malaysia’s outdoor theme park will utilise both Fox and non-Fox intellectual properties.
“We believe that the settlement has reduced the uncertainty over the direction of the outdoor theme park,” AmInvestment Bank added. “This bodes well for Only World Group.
“In light of the news, we have revised our estimated spend per outlet and operating margins for Only World’s Genting operations as we anticipate higher foot traffic upon the completion of the outdoor theme park.”
To note, Only World is currently operating over 20 food service outlets and more than 15 family attractions in Genting, making up circa 40 per cent of its bottom line.
“However, we reduce the estimated contribution from OWG’s The Top, Komtar Tower operations as we anticipate continued lower business volume on the back of lower tourist arrivals in Malaysia, and higher fixed costs due to the asset-heavy nature of the business.
“Recall in 3QFY19, OWG incurred a RM5.7 million core net loss mainly dragged by The Top, Komtar Tower operations.”
AmInvestment Bank revised its estimated spend per outlet and operating margins for Only World’s Genting operations as it anticipate higher foot traffic upon the completion of the outdoor theme park.