According to reports, Genting Malaysia Berhad’s Outdoor Theme Park is closing down temporarily for a major facelift for the next two years, starting 1 September 2013. The Indoor Theme Park and Snow World will remain open
Says CIMB Research, the news is in line with its expectations where it anticipated a disruption to the business as Genting Highlands goes through a major overhaul in its recent note. It is also cutting its numbers for FY13 and FY14 by 6%, but has increased its forecast for Genting Highland’s FY15 by 16% in anticipating of more gaming capacity in this new capex cycle.
In another note by AmResearch, it believes that the closure of Genting Highland’s Outdoor Theme Park would not affect the company’s earnings significantly, as the bulk of profits are generated by the casino division.
“We estimate that non-gaming activities account for 20% of the leisure and hospitality division’s revenue in Malaysia. Including contribution from UK and New York, we estimate that non-gaming activities in Malaysia account for less tham 10% of the group revenue. The leisure and hospitality division in Malaysia accounted for 89% of Genting Malaysia’s EBITDA in FY12,” the note states.
AmResearch further states that the facelift would feature new rides, allowing Genting Malaysia to attract more visitors and encourage higher spending per visitor, thus improving the revenue yields of the group. The research house also believes that the capex for the outdoor theme park would be included under the RM3 billion (bn) facelift announced by the group recently. For FY13F, AmResearch forecasts the group’s capex at RM1.1bn.