‘Genting Highlands could see fewer visitors’
> Lawsuit will take time to be settled and opening of theme park likely to be further delayed: PublicInvest
PETALING JAYA: The legal proceedings between Genting Malaysia Bhd and Twenty-First Century Fox Inc and The Walt Disney Co are likely to affect visitor arrivals at Genting Highlands, according to Public Investment Bank Research (PublicInvest).
The research house noted that the legal tussle will take time to conclude and in the meantime, the opening of the theme park is likely to be further delayed.
In light of this, it has slashed visitor arrival growth rate forecast from 8-9% to 3% (based on 10-year historical average) for FY19-20F, which in turn also resulted in a cut in earnings forecasts by 9-16%.
“We have also ascribed a lower PE multiple for the Malaysian gaming operations in our SOTP valuation (from 14x to 9x), given the uncertainties surrounding its GITP (Genting Integrated Tourism Plan) project,” the research house said in a note.
The project could still remain in a limbo without a key attraction even in the event of Genting Malaysia winning the legal proceeding and receiving the US$1 billion (RM4.2 billion) compensation.
PublicInvest is of the view that seeking an alternative intellectual property licensing would be a challenge.
“We would like to highlight that there is also a potential impairment risk on GENM’s (Genting Malaysia) investment in promissory notes for the financing of the Mashpee Wampanoag Tribe’s development of an integrated resort in the US. Its total investment (including accrued interest) in the promissory notes as at June 30 amounted to US$426.3 million,” it added.
The US Department of Interior is reviewing the Tribe’s rights to the land which is subject to a legislation being introduced and passed in the US Congress.
Genting Malaysia said on Tuesday that it is suing Twenty-First Century Fox and The Walt Disney for more than US$1 billion for terminating their contract to develop a Fox-branded theme park at Resorts World Genting in Malaysia.
The Fox theme park is a key selling point of the Malaysian casino resort group’s multi-billion ringgit Genting Integrated Tourism Plan.
The Walt Disney Co is in the process of acquiring Twenty-First Century Fox.
Walt Disney and Twenty-First Century Fox had reportedly rejected claims in the lawsuit accusing them of abandoning a licensing contract tied to the planned construction of a Fox-branded theme park.
Disney and Fox said Genting Malaysia Bhd’s respective claims against them were “without merit.”