The Twentieth Century Fox World, which is part of the RM5b Genting Integrated Tourism Plan (GITP), was officially launched by the PM yesterday. This RM1b first full-scale 20th Century Theme Park is part of the Phase 1 of GITP alongside with a Premium Outlet, a new 3-star hotel, a 10,000 seating show arena and a new cable car station. We are excited by this revamped exercise, which will not only make this hilltop resort one of the World’s top tourism destinations but will also enhance the pull factor for visitors from the warmer Southeast Asia region, given its cool highland climate advantage. While there is no major impact to earnings in near term, the GITP would escalate GENM’s home turf earnings to new heights. GENM remains as MARKET PERFORM at RM4.39/SoP share as the share price already reflects fair valuation.

The first full-scale 20th Century Theme Park. Yesterday, the PM attended the ground-breaking ceremony of the Twentieth Century Fox World at Resorts World Genting. Genting Malaysia Bhd (GENM, MP; TP: RM4.39) also revised the capex for this theme park to RM1b from RM400m, which was announced earlier in July this year. The increased spending will allow for better rides and attractions on the 25 acres of land, which feature 25 rides and attractions of a cinematic theme based on 20th Century Fox blockbuster titles such as Ice Age, Rio, Alien vs. Predator, Planet of the Apes and Night at the Museum. The revamped theme park will be opened in 2016.

Part of the GITP. The group also announced a bigger plan to revamp the hilltop resort which was named as Genting Integrated Tourism Plan with a total capex of RM5b over 10 years. This is also bigger than its earlier plan of RM3b for a 5-year program. In fact, GENM has signed a MoU with the East Coast Economic Region Development Council (ECERDC) on 16 Dec to embark on this redevelopment plan. The roles of ECERDC include extending assistance to GENM to coordinate with the relevant Federal and State Governments’ departments and agencies. ECEDC will also extend the relevant tax incentives upon GENM meeting the eligibility requirement and term of the approved incentive package.

Phase 1 of GITP. Under Phase 1 of GITP, which will cost c.RM4b, the Resorts World Genting redevelopment plan includes the 20th Century Fox World, a 1,300-room 3-star hotel adjacent to the First World Hotel, a Genting Premium Outlet, a show arena with 10,000 seating and a new cable car station. The remaining RM1b has been allocated for the Phase 2 which is currently at the planning stage. GENM’s Chairman said yesterday that the GITP would be a major contributor towards helping the East Coast Economic Corridor fulfils its target of attracting RM110b investments and creating 560,000 jobs within the East Coast.

A game changer. We are positive on GITP given its sizeable redevelopment plan together with the tie up with 20th Century Fox would rejuvenate and change the image of the ageing theme park facility at the hilltop. The advantage of cool highland climate gives this revamped theme park of a major pull factor over other theme parks in the region for visitors from the warmer Southeast Asia region. In addition, this will also change the image of the highland resort from a purely casino resort to a family leisure resort.

Still MARKET PERFORM. Although we like the GITP which will be a structural change to its home turf operation, we believe the recent run-up in share price is already reflected its valuation. Given that the RM1b theme park will only be ready by 2016, there is no change to our FY13-FY15 estimates. While its share price has already met our price target of RM4.39/SoP share, we believe the GITP is price positive to GENM, hence we maintain our recommendation of MARKET PERFORM on the stock.

Source: Kenanga