Logic Invest Research Blog

Author: loginvest   |   Latest post: Wed, 8 Jan 2020, 4:53 PM


Only World Group Holdings Bhd 2Q FY 2019 Results Report (HOLD)

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YTD 2Q FY19 revenue increased 6.6% vs YTD 2Q FY18, whilst PBT decreased 79.9% over the same period. The increase in revenue is primarily attributed to OWG’s food service segment. Turnover growth in both amusement & recreation sectors is slowing down, and the days of heady growth rates seem to be over for now. As mentioned previously, heavy borrowing was a worry, and now OWG is seeing much higher interest costs. The stronger MYR is dampening tourist arrivals generally, whilst uncertainties regarding Genting Highlands continue to dampen OWG’s profit outlook. 


Risks to our recommendation and target price include: i) weak consumer sentiment ii) lower growth in tourist arrivals, and iii) an increase in the general level of interest rates. 


We maintain our HOLD recommendation on Only World Group Holdings Bhd (“OWG”) whilst reducing our fair value estimate to MYR 0.60. The commencement in 1Q18 of four family attractions, three retail and beauty salon outlets at Sky Avenue, Genting Highlands; two family attractions and one new outlet at the TOP, KOMTAR Tower, Penang has lifted sales somewhat. The increase in FY 2Q 2019 net profits is largely due to a tax credit. Investors may be better served by using OWG’s PBT as a guide to current and future operational health rather than PAT. 


Only World Group Holdings Berhad (OWG) is engaged in the businesses of investment holding and provision of management services. It operates in three segments. The Food service operations segment operates cen-tral kitchen and food service outlets. The Amusement and recreation Operations segment operates water amusement parks and family at-tractions. The Other services segment is involved in the operation of various products and services and investment holding. Its subsidiaries include Believe It Or Not Sdn. Bhd., which is engaged in operation of family attractions and provision of other services; Dunia Setulin Sdn. Bhd., which is engaged in operation of food service outlets; K.C.K. Capital Sdn. Bhd., which is engaged in the operation of a main central kitchen; Kota Tinggi Resorts Sdn. Bhd., which is engaged in the opera-tion of a resort and a food service outlet, and Magnificent Empire Sdn. Bhd., which is engaged in operation of food service outlets and provi-sion of other services.

Source: Wilson & York Securities Research - 26 Feb 2019

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