KUALA LUMPUR (Dec 4): MIDF Research has valued Only World Group Holdings Bhd (OWG) at RM1.20 and said it was fairly positive on the long term prospect of OWG premised on its key catalyst, i.e. the completion of the Genting Integrated Tourism Plan (GITP) in Resorts World Genting (RWG) that would see an influx of visitors, benefiting the food service outlet (FSO) segment.
In a note Thursday, the research house said it was also positive on OWG’s plan to foray into Penang as it would diversity the Group’s earnings base which currently relies on its Genting outlets.
“While we are cautiously optimistic on the prospect for its amusement and recreation (A&R) business given the heightened competition from other established amusement park operators, the division has limited contribution to OWG’s earnings,” it said.
MIDF Research said it expects OWG’s earnings to grow 62% in FY15F and 57% in FY16F driven by the FSO sector following its expansion plans.
“We value the stock using the DCF methodology which assumes a WACC of 9.4% and terminal growth rate of 3%.
“This implies a target price of RM1.20, 36.7% upside from the IPO price of 88 sen. Against our forecasts, the stock implies an FY15 PE of 9.4x and 1.5x PB,” it said.
MIDF Research, however, does not have a rating on OWG.
OWG is tentatively slated to list on the Main Market of Bursa Malaysia on Dec 18.