Only World Group continues to underwhelm on earnings

KUALA LUMPUR: While Only World Group Holdings Bhd (Only World Group) has tremendous prospects ahead, AmInvestment Bank Bhd (AmInvestment Bank) observed that the group continues to underwhelm on earnings in the interim.

As per the group’s filing on Bursa Malaysia, profit after taxation for the current year to date ended March 31, 2018 amounted to RM5.88 million, up from RM4.7 million in the corresponding period of the previous year.

Only World Group’s first nine months of financial year 2018 (9MFY18) earnings of RM5.8 million was below AmInvestment B an kBhd’s ( Am Investment Bank) and consensus expectations at 44 per cent and 49 per cent of full year estimates respectively.

According to AmInvestment Bank, revenue was partially offset by the 31 per cent year on year (y-o-y) contraction in the food service outlets (FSOs) revenue for the quarter.

Going forward, the research firm expected revenue growth to turn positive heading into FY19F, supplemented by 10 to 15 new kiosks within the Twentieth Century Fox World theme park.

As for the group’ s E BIT margins, AmInvestment Bank noted that it improved dramatically by 8.1 per centage points (ppts) to 12.9 per cent for the quarter y-o-y.

“This is attributed to greater economies of scale and is reflective of Only World Group’s high operating leverage.

“We expect it to underline future revenue growth to exponentially drive earnings heading into FY19F,” the research firm said.

However, AmInvestment Bank lowered its estimates in tandem with more conservative margin assumptions.