OWG (5260) - Only World Group Holdings - Holiday cheers
Target RM2.62 (Stock Rating: ADD)
1HFY06/15’s core EPS of 3.9 sen was in line at 51% of our full-year forecast (yoy comparison not available as OWG was listed in Dec 14). No dividend was declared, in line with expectations. The stronger qoq results in 2Q was due to increased patronage at its food outlets and amusement parks with the year- end holiday season. Its EBITDA margin was 2.7% pts below forecast due to listing expenses and equipment write-off relating to the relocation of outlets at Genting. We maintain our forecasts, target price (based on 19x CY16 EPS, a 20% discount to the target P/E of its larger cap F&B peers) and Add rating. Potential rerating catalysts are the launch of the Genting Integrated Tourism Plan and signing of the tenancy agreements to fill up Komtar Penang.
Holiday cheer
In 1H15, OWG expensed RM0.34m in listing expenses and RM1.1m in equipment write-off due to the relocation and closure of food service outlets (FSOs) at Genting Highlands. In addition to the increased holiday season traffic, OWG also saw a net addition of three outlets in Genting (closed five and opened eight outlets), which contributed to a 28% increase in revenue qoq. OWG’s revenues continue to be dominated by FSOs (79%), followed by amusement parks (21%).
Komtar tenancy to be wrapped up soon?
We expect OWG to complete the signing of the various tenancy agreements to fill up the space in Komtar by end-1HCY15. OWG will keep some of the space for its own F&B operations (levels 59 and 60) and lease out the remainder (levels 5 and 65, the roof top bar). We have not imputed any contribution from the OWG-operated spaces in Komtar. Upside to our forecasts include further space expansion in Komtar, which will increase its net lettable area.
2016 will be the year
While earnings in FY15 will be flat due to the ongoing renovation works at Genting and Komtar, investors can look forward to an exciting 2016 when Sky Avenue is launched and the theme park is ready. The newly-refurbished Komtar will also be ready by end-2015. This will drive EPS growth of 46-47% in FY16-17. We also expect a maiden dividend payment of 2.8 sen commencing FY16.
Source: CIMB Daybreak - 25 February 2015
Target RM2.62 (Stock Rating: ADD)
1HFY06/15’s core EPS of 3.9 sen was in line at 51% of our full-year forecast (yoy comparison not available as OWG was listed in Dec 14). No dividend was declared, in line with expectations. The stronger qoq results in 2Q was due to increased patronage at its food outlets and amusement parks with the year- end holiday season. Its EBITDA margin was 2.7% pts below forecast due to listing expenses and equipment write-off relating to the relocation of outlets at Genting. We maintain our forecasts, target price (based on 19x CY16 EPS, a 20% discount to the target P/E of its larger cap F&B peers) and Add rating. Potential rerating catalysts are the launch of the Genting Integrated Tourism Plan and signing of the tenancy agreements to fill up Komtar Penang.
Holiday cheer
In 1H15, OWG expensed RM0.34m in listing expenses and RM1.1m in equipment write-off due to the relocation and closure of food service outlets (FSOs) at Genting Highlands. In addition to the increased holiday season traffic, OWG also saw a net addition of three outlets in Genting (closed five and opened eight outlets), which contributed to a 28% increase in revenue qoq. OWG’s revenues continue to be dominated by FSOs (79%), followed by amusement parks (21%).
Komtar tenancy to be wrapped up soon?
We expect OWG to complete the signing of the various tenancy agreements to fill up the space in Komtar by end-1HCY15. OWG will keep some of the space for its own F&B operations (levels 59 and 60) and lease out the remainder (levels 5 and 65, the roof top bar). We have not imputed any contribution from the OWG-operated spaces in Komtar. Upside to our forecasts include further space expansion in Komtar, which will increase its net lettable area.
2016 will be the year
While earnings in FY15 will be flat due to the ongoing renovation works at Genting and Komtar, investors can look forward to an exciting 2016 when Sky Avenue is launched and the theme park is ready. The newly-refurbished Komtar will also be ready by end-2015. This will drive EPS growth of 46-47% in FY16-17. We also expect a maiden dividend payment of 2.8 sen commencing FY16.
Source: CIMB Daybreak - 25 February 2015
