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Suing Fox for RM4.19 billion. Market capitalisation dropped RM4.89 billion.

Everytime I visit Genting Highlands, I could see the progress of their upcoming new theme park, Fox World. An earlier article here: Genting Highland’s Sky Avenue  I think I will have to wait for a much longer time for the theme park to be opened. Genting Highland has filed a suit of US$1bil suit against Walt Disney Co and Twenty-First Century Fox Inc over the cancellation of the first Fox-branded theme park. Genting Malaysia accused them of abandoning a contract related to its planned construction of the first Fox-branded theme park. The suit was in response to a notice issued by FOX in which it terminated the MoA and claimed about US$46.2mil (or RM193.6mil) in accelerated payments. For the full story, the article in TheStar here. 

As for Genting Malaysia and Genting Bhd, both these shares had a combined loss of RM4.89 billion from their market capitalisation on Tuesday (27th November 2018). Nevertheless, this is what CIMB Equities Research said of Genting Malaysia. It said, based on a news report, Genting Malaysia had already invested US$750mil in the theme park. Thus, “This news is a major negative surprise to us. Genting Malaysia’s theme park was supposed to open in end-2017 but the date has been delayed to 1H2019. Due to potential legal complications, we are concerned if Genting Malaysia could still open the theme park in 1H2019. Due to the opening of the new theme park in 2019F, we had earlier forecast visitor arrivals to rise 14-15% in 2019/2020F. Now, it looks like our forecasts could be too optimistic.” It said, “We are maintaining our EPS forecasts and our Hold call pending the conference call with management this Friday on its 3QFY18 results. A re-rating catalyst is the opening of the new theme park in mid-2019 while a de-rating catalyst is the theme park failing to open in 2019. Our target price remains pegged to its RNAV of RM4.85.” For the full story, the article in TheStar here. 

For now, just visit Genting Highlands for GPO and the cool breeze then.  The theme park is likely to be delayed further. As for buying the shares, the current prices do represent an opportunity because every time I go up there, it’s full of people.

written on 28 Nov 2018

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