AmInvestment Research starts coverage on Only World Group, fair value RM1.66

AmInvestment Research starts coverage on Only World Group, fair value RM1.66
-A +A

KUALA LUMPUR (July 7): AmInvestment Bank Research has initiated coverage on Only World Group Holdings Bhd (OWG) at RM1.70 with a “Hold” recommendation and fair value of RM1.66.

In a note today, the research house said its fair value is based on a PE of 16.5x on CY18F EPS, which is close to the average of its peers.

It said OWG’s PE-to-growth of 0.6x suggests value relative to its peers (1.5x).

“However, we prefer for greater clarity over top-line and bottom-line growth as its attractions unfolds going into FY18 before we consider a rerating,” it said.

AmInvestment Research said OWG’s Komtar project is firmly entrenched in the heart of Penang, conveniently located within the vicinity of large captive tourist hotspots.

“It offers an integrated entertainment attraction for families, including a complete ecosystem of F&B and retail stores.

“Aside from channelling traffic from tour agencies, management looks to optimise its pricing strategy to maximise receipts.

“We are excited as it addresses what we perceive to be affordability issues. We forecast OWG’s Komtar revenue to grow exponentially over FY17F-FY19F in tandem with the gestation period of The [email protected],” it said.

AmInvestment Research said Genting Malaysia Bhd’s RM10.4 billion investment into its Genting Integrated Tourism Plan (GITP) is expected to drive OWG’s Genting operations to new heights.

“We expect OWG’s expansion to peak in tandem with GITP’s cornerstone development, Twentieth Century Fox World theme park.

“We do not expect any dividend payouts as OWG undergoes an aggressive expansion phase. Meanwhile, gearing remains elevated. We opine OWG may pursue further fund raising to cushion its balance sheet as its assets gestate over the incoming years.

“Key risks to OWG include decline in international tourists, heightened competition in Genting and execution issues,” it said.