GGRAsia – Genting Highlands theme park delay to 4Q 2021: analysts

Genting Highlands theme park delay to 4Q 2021: analysts

May 22, 2020 Newsdesk Latest News, Rest of Asia, Top of the deck

The opening of an outdoor theme park at Resorts World Genting, Malaysia’s only casino resort complex (pictured), has been delayed by more than 12 months, to the fourth quarter 2021 from the third quarter this year, due to the impact of Covid-19.

That is according to a Friday note from Nomura Group, citing guidance from management at Genting Malaysia Bhd, the operator of the complex.

The firm had swung to a first-quarter net loss of nearly MYR418.0 million (US$96.0 million), compared to a MYR268.3-million net profit in the prior-year quarter, in results announced on Thursday. It blamed the deterioration in business on the effects of the pandemic.

The group’s resort operations worldwide had been temporarily suspended from mid-March amid efforts to stem the further spread of the coronavirus pandemic. In Malaysia, all of its resorts remain shut.

“The big negative from the results announcement was the delay of the theme park opening date from third quarter 2020 to fourth quarter 2021 due to travel restrictions, weak demand and slow pace of works during Covid-19,” said a Friday note from Nomura Research analysts Tushar Mohata and Alpa Aggarwal.

A Thursday memo from Samuel Yin Shao Yang of Maybank IB Research in Malaysia, noted the institution forecast Genting Malaysia’s full-year 2022 earnings before interest, taxation, depreciation and amortisation to grow by 37 percent year to just over MYR3.1 billion, “as Resorts World Genting’s outdoor theme park opens and ramps up”.

In October Maybank had said guidance from Genting Malaysia’s management had indicated the cost of the outdoor theme park at the resort in Genting Highlands outside Kuala Lumpur would go above US$700 million, which Maybank had not been expecting.

The genesis of the outdoor theme park has been long and with complications.

It is part of a more general overhaul of the Resorts World Genting site, via an initiative dubbed the ‘Genting Integrated Tourism Plan’, or ‘GITP’. It has involved the expansion and revamp of the whole complex. The initial capital budget for the overall plan was set at MYR5 billion, but by early 2016 it had swelled to more than double that.

The outdoor theme park should have originally carried “20th Century Fox” branding, and in 2014 there was commentary from analysts – based on guidance from management – that it might open in 2016. In March 2016, Nomura commentary said the park’s launch would “not happen before end-2017”.

In November 2018, it emerged Genting Malaysia had filed a lawsuit in the United States for circa US$1 billion against Walt Disney Co – a firm involved in a takeover of some Fox-branded intellectual property assets – and Fox Entertainment Group LLC and some related companies. The Genting side alleged bad faith over a stalling of the theme park project.

In July 2019 Genting Malaysia said it had reached a settlement “fully resolving” the suit. Under the announced peace deal, the outdoor theme park would contain “Fox and non-Fox intellectual properties” and use a new name, said the casino group in a Thursday filing to Bursa Malaysia.

In October, Maybank had said it expected the theme park – described as 26 acres (10.5-hectares) in area – would have a soft opening in the third quarter of 2020, with 20 rides at that stage – four of them rollercoaster-type attractions – using “Fox intellectual property”.