CIMB report today-
Beneficiary of 2017 Budget
The introduction of eVisa in 2017 for South Asian tourists should benefit OWG as South
Asians, as a proportion of total tourist traffic (excluding Singapore) to Malaysia, is the
second largest after China and similar to European tourist arrivals. According to our
regional transport analyst Raymond Yap, eVisa facilities for Chinese tourists introduced
in Malaysia in 1 Mar 2016 resulted in a 30% yoy increase in 1H16. Malaysia is also
hosting the 2017 SEA and Para ASEAN games.
Malaysia a beneficiary of Thai slowdown
Following the death of King Bhumibol, the government has declared a one-year
mourning period. We believe that Malaysia could be a big beneficiary of any fallout in
tourism to Thailand. China, Malaysia and Japan are the three largest sources of tourists
to Thailand. For Penang, Indonesia, Singapore, China and Japan are the largest tourist
sources. A diversion of tourist traffic from Thailand to Penang is a huge positive for
OWG.
On track for official launch in Dec
Komtar remains on track for its official launch on 18 Dec. Various regulatory approvals
and certificate of fitness are in the midst of being obtained. We see little risk of delay
given that Komtar is a priority state-driven initiative. This should alleviate investors’
concerns about further delays for Komtar’s opening. We view this as a major re-rating
catalyst for the stock.
Completion of private placement
OWG’s second tranche of private placement was completed at RM2.13 per share and
the 8.9m new shares were listed on 13 Oct 2016. This removes the earlier concerns of
share overhang.
Sensitivity analysis
Our base case estimate is for 560k visitors to Komtar in FY17 and 1m visitors p.a. in
FY18-19. Our sensitivity analysis suggests that every 100,000 increase in visitors to
Komtar will raise FY18F EPS by 5.2%. This is a conservative estimate as we have not
imputed any revenue and profit contributions from the themed attractions at Komtar; only
revenues from the interactive lifts have been included in our estimates.
Raise target price on rollover
We maintain our EPS forecasts but raise our target price for OWG by 28% to RM5.60 as
we rollover to end-2017. Our target price is pegged to 20.8x CY18F P/E, at a 10% smallcap
and liquidity discount to the F&B sector average. Potential re-rating catalysts are the
opening of Komtar and higher-than-expected visitation numbers. A key risk is further
delay in Komtar’s opening.

https://brokingrfs.cimb.com/OS0bhj6I-gcgsLC6Ov9lzXD05b4woVLysapshn-Bi1j84mWYsN9Tdd2u1EWxyy2lHbo7c9Wd8gUfEVOv0.pdf

This stock is worth RM6 in a year's time.