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KUALA LUMPUR (Oct 18): Shares in Only World Group Holdings Bhd (OWG) fell as much as 3.1% to hit an
intraday low of RM2.21 yesterday, on concerns that Saturday’s fire incident would delay the opening of its theme park in the Komtar building at George Town, Penang.
The stock traded at between RM2.21 and RM2.27 before closing at RM2.26, down two sen or 0.88% from last Friday’s closing of RM2.28, with 650,200 shares done. Its market capitalisation stood at RM548.92 million.
A fire reportedly broke out on level five of the Komtar building on Saturday at about 9.30am, which spooked investors’ concern that it may affect the opening timeline of the soon-to-be opened theme park in Komtar. The Penang Fire and Rescue Department spokesman said that the fire was put out by 10am. Nobody was injured in the incident.
In a note to clients yesterday, CIMB Research said it spoke to OWG’s management to obtain clarity on the matter and was told that the fire damage was immaterial.
“According to management, welding works on steel structures in the outdoor rear area of level five ignited some aluminium foil that started a small fire. This resulted in heavy smoke,” it said.
“Management clarified that the incident does not affect its official opening date of Dec 18. It maintains its planned November deadline for opening the interactive lift and outdoor themed attractions,” the research firm added.
With improved clarity on the theme park’s opening timeline, CIMB Research believes that the stock is poised for a significant rerating.
“OWG is trading at a forward 2017 price-to-earnings ratio of only 11.4 times, which is more than a 50% discount to the food and beverage sector’s average. This is unjustified, in our view, as the Komtar delay is merely a timing issue,” it noted.
CIMB Research is maintaining its “add” rating on OWG with a target price of RM4.36, assuming a late-November opening of the interactive lift and outdoor themed attractions at Komtar.
“We have not imputed any revenue and profit contributions from the themed attractions at Komtar. We have also not imputed additional profit contribution from the additional space that OWG will be securing, as it is still finalising the amount of additional space in Sky Plaza in Genting Highlands,” it said.
Yesterday, Bernama quoted Global Built Sdn Bhd managing director Lim Chip Keong as saying that the construction progress of the theme park was still on track and scheduled to be completed by end-November.
“The blaze only affected a small portion of the roof on that floor. The roof is 24ft high, so the fire was an isolated one. That was why you saw a lot of smoke at the roof level. The fire was minimal,” he said in the report.
“No damage was reported at any of the premises. The fire was put out within half an hour, and no injuries were reported. The cost of damage has not yet been determined,” the report added.
OWG clinched the RM180 million Komtar revitalisation project from Penang Development Corp in December 2012.
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This article first appeared in The Edge Financial Daily, on Oct 18, 2016. Subscribe to The Edge Financial Daily here.
