Tuesday, July 30, 2013

Genting Malaysia - one of international stock to play


The news came out, this time, Genting Malaysia plan to invest over RM400 million to build the world's first Twentieth Century Fox Theme Park to replace the current old one. (involve RM3 Billion in capex spread over next 5 years) What's so special with this Theme Park? Perhaps we need to wait till 2016 then go and experience it, first in the world? I have never see it anywhere! The programme will include the construction of additional 1,300 hotel room to cater for the increase of visitors.
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The chairman, Tan Sri Lim Kok Thay is always think big. In the big river, back wave is always push the front wave, his dream is even bigger than his father. That is the reason I always think that Genting Malaysia is having potential to grow bigger especially you see how they expand their casino in US.
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The current theme park was 25 years already, it's time to give it a new look. As in the region, we can see Legoland and Universal Studios Singapore attract many visitors currently. The story tell by Mr Chairman, that the latest project with Fox will double the number of visitors from 3 million people currently. (I doubt if the visitor really can maintain at 6 million say for the next 10 years!) Anyway, I think for the first and second year, it will do exceptional well because of the novelty effects. For Malaysian, if they were to look for somewhere cool for holiday, beside Cameron Highlands, Genting Highlands will be another good destination. This is big project, similar to Disney land for Malaysia, so think Big is alright! (Maybe someone will think as if the Chairman hint that the profit may double?)
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Another interesting point I want to know is how much they intend to sell the ticket for new Theme park? The current ticket price is RM53 per person. The Legoland is RM120 and Universal Studious Singapore is SGD96. (RM245) Assume they price the new ticket at RM100 and manage to double visitors from current 3 million to 6 million, then the new theme park's revenue will increase to at least 4x compare to current old one!
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The Chairman look like doing a good job, the company sure doing well in the coming years. Those who trade (not invest) in this company will continue to make good profit if they know how to trade the share according to market conditions. This may view as bad news for investors as well, as the company's dividend may be cut to reduce when their project start. The way I look at it, well, it's the wisdom of the chairman, plan for the worst case that could happen when you are doing well, or Chinese say, 居安思危. For Trader in the market, think of the worst case scenarios if you are in the midst of enjoying the party, good luck!
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