KUALA LUMPUR (Nov 27): Hong Leong IB Research (HLIB Research) has maintained its “neutral’ rating in on the gaming sector and said the pulling out of Walt Disney Co and Twenty First Century Fox Inc from Genting Malaysia Bhd’s (GenM) Twentieth Century Fox World theme park will deter potential growth.
However, the research house said the impact is less severe than the hike in gaming tax as non-gaming revenue (from Resorts World Genting) accounts only 10% to 15% of GenM’s and 4% to 8% of Genting Bhd’s total revenue.
In a sector update today, HLIP Research said it opines that the theme park will still proceed, possibly under a different brand, as Disney is only the licensor.
“We are of the view that the theme park will eventually [be rolled out] despite the ongoing tussle with Disney as GenM is still the asset owner while Disney is only the licensor,” said the research house, adding that this, however, will likely fall out of its forecast horizon.
It said that in the worst case scenario, it may involve rebranding exercise (other theme park brand or own brand) and that would incur additional capex on the redesigning of themes and rides.
“We upgrade GenM to ‘hold’ with lower SOP-derived target price of RM3.41 ([from] RM4.01) given the share price plunge.
“We maintain ‘hold’ on Genting with lower SOP-derived target price of RM7.18 (from RM7.51). Maintain ‘neutral’ on the (gaming) sector,” the research house said.
At the midday break today, GenM lost 14.72% or 53 sen to RM3.07, while Genting fell 6.52% or 45 sen to RM6.45.