Dividend payments unlikely in FY19 — OWG

KUALA LUMPUR (September 13): Only World Group Holdings Bhd (OWG) will probably not be distributing dividends to shareholders in the current financial year ending June 30, 2019 (FY19) as it preserves its cash for working capital.

“I think our operations still need a lot of money to continue [to run the group] such as to fund marketing programmes, so it is likely [there will be] no dividends paid [out to shareholders] in FY19,” its chief operating officer Puan Sri Jean Koh told reporters after the group’s extraordinary general meeting (EGM) yesterday.

Koh declined to say when the group aims to resume dividend payments.

Since listing on Bursa Malaysia on Dec 18, 2014, OWG has paid dividends only once to shareholders. The group declared a first interim dividend of 2.8 sen per share on Oct 13, 2015, which was paid on Nov 15 that year.

Meanwhile, OWG is allocating RM50 million as capital expenditure (capex) for FY19, which will be used to upgrade its existing indoor playlands and commence new playlands.

Koh said part of the capex will also be used to upgrade the ageing facilities at its playlands in Bangsar Shopping Centre and 1 Utama Shopping Centre.
The amount of capex for FY19 will be similar to that in FY18, she added.

“We have been in Bangsar Shopping Centre and 1 Utama for more than 10 years. The facilities there are ageing and need to be refreshed, [with new things] put in,” she said.

Besides upgrading its existing playlands, Koh said the group is keeping its options open on expanding its number of indoor playlands, with the group targeting to open new playlands in the third quarter of 2019.

“We have received some offers and we are negotiating [with the parties]. We are looking for good deals in terms of rental before we consider moving into the malls,” she added.

The group is also exploring expanding its indoor playlands beyond Kuala Lumpur, to areas like Penang and Selangor.

On prospects, Koh expects a better FY19 as OWG continues to reap the benefits of the increasing number of tourists.

“We are [operating] in captive markets [like Penang and Genting Highlands] where we will benefit from increasing numbers of visitors,” she said.

She is also expecting the group’s food service outlet business to improve in FY19 following the reopening of outlets in Genting Highlands.

Currently, OWG operates 38 food service outlets in Malaysia, of which 23 are located in Genting Highlands, 13 at Komtar Tower in Penang, one at Johor Premium Outlets and one at the corporate office of OWG in Selangor.

In FY18, OWG’s food service outlet revenue fell 26.8% year-on-year (y-o-y) to RM69.05 million against RM94.31 million in FY17, due mainly to the temporary closure of its outlets at First World Plaza in Genting Highlands.

For the loss-making Komtar Tower, Koh said the group is undertaking aggressive marketing efforts to promote it. This, coupled with the Penang government’s initiatives to promote the state as a major tourist attraction, will improve the operations at Komtar Tower, she added.

For FY18, OWG’s net profit rose 17.2% to RM6.36 million from RM5.42 million a year ago, while revenue grew 13.2% to RM131.59 million from RM116.20 million in FY17.

This article first appeared in The Edge Financial Daily, on Sept 13, 2018.

For more stories, download EdgeProp.my pullout here for free.