Genting amusement park will continue to operate, according to HLIB Research

KUALA LUMPUR (November 27): Hong Leong IB Research (HLIB research) maintained its "neutral" rating in the gaming sector and announced the withdrawal of Walt Disney Co and Twenty First Century Fox Inc from Genting Malaysia Bhd & # 39; s (GenM) Century Fox World theme park will discourage potential growth.

However, the research company said the impact is less serious than the rise in the gaming tax, as non-fun revenue (from Resorts World Genting) accounts for only 10% to 15% of GenM and 4% to 8% of Genting Bhd's total revenues.

HLIP Research said in an industry update that the theme park will continue to operate, possibly under a different brand, since Disney is only the licensor.

"We are of the opinion that the theme park will eventually [be rolled out] Despite the fierce fight with Disney, GenM is still the owner of the asset, while Disney is only the licensor, "said the research house, adding that this was likely to fall apart of its forecast horizon.

In the worst case scenario, this might involve a brand change exercise (another brand of theme park or own brand), which would involve additional investments for redesigning themes and attractions.

"We are upgrading GenM to" hold "with a lower SOP derived target price of RMB3.41 ([from] RM4.01) given the plunge in stock prices.

"We maintain our position on Genting with a lower target price of RM7.18 (from RM7.51), derived from the SOP, and let's remain" neutral "on the sector (games)," the research firm said.

Today at the midday break, GenM lost 14.72% or 53 Sen at RM3.07, while Genting lost 6.52% or 45 Sen at RM6.45.