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KUALA LUMPUR (Nov. 28): The Genting Malaysia Bhd (GenM) recorded a slight recovery and grew by 1.67% today, despite fears that it will not be able to lead to well its theme park project 20th Century Fox World. it invested 750 million USD (3.14 billion RM).
After losing some 3.39 billion RMB of market capitalization yesterday, GenM rose 5 Sen. At 3.53 RM with 35.44 million shares purchased this morning. Shares of its parent company, Genting Bhd, also rose 10 Sen or 1.57% to 6.48 million, with 2.22 million shares traded.
Yesterday Bloomberg reported that GenM sued Twenty-First Century Fox and its future new owner, Disney, for giving up an agreement to create a Fox World amusement park in its casino outside Kuala Lumpur.
CIMB IB Research said this surprise was very negative, as it maintained a "pending" call for the title with an unchanged target price of 4.85 RM.
The research firm announced that it was maintaining its earnings forecast and its call "pending" while waiting for a teleconference with the management of the group this Friday on its 3QFY18 results.
"The GenM attraction park was scheduled to open in late 2017, but the date has been postponed to 1H2019. Due to potential legal complications, we are concerned that GenM may still not open the attraction park at 1H2019", said yesterday in a note.
The CIMB added that the forecast for high visitor numbers in 2019 and 2020 may be unrealistic, due to uncertainties surrounding the opening of the park.
"Due to the opening of the new theme park in 2019F, we forecast that the number of visitors would increase by 14-15% in 2019 / 2020. It now seems that our forecasts could be too optimistic," he said. -he declares.
In his report, Bloomberg GenM claims more than $ 1 billion in damages, according to a lawsuit filed Monday in a federal court in Los Angeles, in which Fox reportedly ended the deal, according to GenM, "It's that Disney does not do not want to be associated with a gambling business.
At the same time, in a sector update released yesterday, Hong Leong IB Research (HLIB research) indicated that it was of the opinion that the theme park would continue, under possibly a different brand, given that Disney was 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 HLIB Research, adding that this would likely not be part of the deal of its forecast horizon.
The research company stated that in the worst case, it could be a branding exercise (another brand of thematic park or private label), which would entail additional expenses for the reconfiguration of themes and attractions.
"We are upgrading GenM to" hold "with a lower SOP derived target price of RMB3.41 ([from] RM4.01) given the fall in the share price, "he said.
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