KUALA LUMPUR: The runaway success of the augmented reality game Pokemon Go in Malaysia can be a game changing revenue booster for the retail scene here, and retail real estate investment trusts (REITs) are expected to benefit, with Sunway REIT seen to provide the best upside, according to UOB Kay Hian Research.
In a strategy note yesterday, UOB Kay Hian said the hugely popular augmented reality game, which was launched in Malaysia on Aug 6, has already created higher footfall in malls.
“Although turnover revenue accounts for only less than 10% of retail REITs revenue, sustained higher footfall leads to better rental reversion. Sunway REIT has reportedly experienced a double-digit hike in average footfall at its malls with car count increasing by 10%. Similarly, Suria KLCC and Pavilion have also garnered attraction from Pokemon Go hunters,” said the research firm.
As such, it believes “retail REITs are expected to remain [as] market outperformers, with Sunway REIT providing the best upside”.
But though it has been quite evident that many Malaysian retailers have experienced significantly higher footfall, only the retail REITs are the clear beneficiaries, it said, followed possibly by convenience store operators.
Which is why it expects a neutral to positive impact from the game on convenience stores.
“KK Supermart & Superstore Sdn Bhd, which operates a chain of 223 convenience stores in shoplots, has reportedly seen a surge in footfall, with the sales of some stores shooting up by up to 20%.
“About one-third of both 7-Eleven Malaysia Holdings Bhd and Bison Consolidated Bhd’s stores are located in malls. The higher footfall in the malls may translate into higher sales for these convenience stores. However, we note from these companies that at this juncture, impact to earnings is minimal,” said UOB Kay Hian.
As food and beverage (F&B) retailers, it estimates the game’s impact on them is neutral at this juncture. “F&B retailers like Starbucks, OldTown and other F&B retail chains surveyed saw minimal impact with sales being consistent before and after Pokemon Go’s launch. Nevertheless the higher footfall in malls and shoplots could eventually translate into higher sales for F&B retailers.”
Further, more F&B retailers are starting to purchase Pokemon “lures” to enhance footfall in hopes of enhancing revenue, the research house noted.
The telecommunications industry, on the other hand, could potentially see marginally positive impact from higher data usage and prepaid reloads due to the game. But UOB Kay Hian noted that the data usage required for Pokemon Go is generally modest, at a rough gauge of 10MB per day for active Pokemon hunters.
On the technology sector, the firm noted that Pokemon Go may have a long-term positive impact.
“Pokemon Go hastens the adoption of smartphones, currently accounting for about 30% of global mobile phones. This in turn benefits smartphone component contract manufacturers, such as Inari Amertron Bhd,” said UOB Kay Hian.
In short, it said the game, which promises by far to be the highest revenue grossing game in history, can provide at least a short-term lift to Malaysian companies.
“Although widely seen as a fad, this game’s shelf life could well exceed common expectations; 90% of players who downloaded the app continue to play a month after its launch, according to a media report,” it added.