Q1'FY17 CONCALL UPDATES:
• In Q1 FY 17, revenue grew by about 32% to Rs 88.87 crores driven by 18% growth in average revenue per visitor and 12% increase in total footfalls. The Q1 EBITDA declined by 2.71% YOY to about Rs 39.2 crores. EBITDA margin declined by 1584bps to 44.1%. The EBITDA margin got impacted mainly because of our overall increase in operating expenses on account of the addition of Hyderabad Park.
• PAT margins got impacted mainly due to higher depreciation, due to the addition of Hyderabad Park and also due to the decline in other income during this quarter as Q1 FY 16 other income largely included dividend from our IPO proceeds.
• The overall footfalls of course increased by around 12% to 7.92 lakhs from 7.06 lakhs last year. This is mainly because of the increase in footfalls by 2 lakhs from Hyderabad. Overall revenue grew by around 31% roughly around from Rs 68 crores to Rs 90 crores that is also mainly banking on Hyderabad.
Hyderabad Park Updates:
• 200,000 visitors visiting the Park during 2.5 months of opening.
• Spread over 49.5 acres of land with Current development on 27 acres of Land.
• The park initially comprises of 43 rides which includes 18 wet rides and 25 dry rides.
• The park boasts of India’s first ever reverse looping roller coaster named RECOIL, with maximum height of 40 metres and with 6 inversions per ride, imported from the Netherlands.
• It is also the first park in India with Cashless RFID based transactions facility
• Hyderabad has given total revenue of close to Rs 19.5 crores.
• Average ticket revenue in Hyderabad collected net of taxes is around Rs 650 and sale of Food something close to Rs 110and sale of product is highest among the three Parks at Rs 163. Overall per head revenue at Hyderabad is now close to Rs 948.
• Rs4 crore was the Hyderabad opening marketing expenses probably and another Rs 4 crore in next two quarters together.
• Hyderabad Park is around Rs 92 higher in term of Non-Ticket revenue mainly due to sale of merchandise.
Bangalore Park Updates:
• Bangalore Park witnessed roughly 25% increase in average ticket Price and 18% increase in average Non-Ticket revenue.
• Coming back to the most important part of the footfalls break up for Bangalore and Hyderabad, of course Bangalore has shown a 12% decline and general footfalls have gone below from 4.17 to 3.67 lakhs.
• Out of the 12% decline around roughly 10% decline happened in the area of Adult and Child that is the full paying customers.
• But despite this, the revenue of Bangalore has shown an increase of 8.5%. This is mainly because of the increase in average revenue.
• Most significant thing is that the Coming to the Resort part, the first quarter clocked around 67% occupancy vs 48% occupancy during last year so the acceptance of Resort is improving among the local public as well as the Corporate.
• Bangalore Park there was around 50,000footfall reduction out of which around 35,000 was Walk-in customers, 8,000 was Corporates and balance from Schools. With respect to Corporates that was mainly because of the shift from Corporates to next quarter. We don’t feel the business is moving away from us. Bangalore last year had 11,000 students which was only 9,000 students this year, so the only difference is 2,000.
• Over a period, you can see that in Bangalore there is average increase in the Restaurants revenue of 30% compared to 10% increase in the ticket revenue. So Food. Of course Food revenue will be increasing than rest and next quarter you will see the difference in Bangalore which is following the Hyderabad way and in Q3 or between the Q3 or Q4 you can see the same in Cochin.
• Average food revenue in Bangalore is Rs 88 and that in Hyderabad is Rs 105
Cochin Park Updates:
• Cochin Park saw a 21% increase in average ticket Price and 32% increase in average Non-Ticket revenue. Footfalls in Bangalore decreased by about 12% and Cochin Park declined by about 24%.
• Kochi had a sharper decline in footfall as it showed around 24.5% or around 70,000 reduction in footfall. Out of 70,000, 50,000 footfall reductions were in the core category of the full paid customers which included 40,000 reductions in Adult category and 10,000 reductions in Child category. So this being the case, Cochin had a negative growth in revenue by close to around 8%.
• Our entire Summer Campaign Advertising and Marketing campaign was based on Water Park and we have to withdraw that campaign because we fell that it might raise too many eyebrows especially during a drought situation
• Cochin specially we also feel we have done lot of research on this there is a slight issue of product mix also I think we need to change, we need to refresh the Park little bit and we working on that.
• As per our Market Surveywe will have to concentrate on an area of 100 km to 125 km rather than 250 km to 300 km were we able to do in Bangalore and probably in Hyderabad. So Cochin had 2-3 issues one is price hikes and the other issue that came up was that our Park is lightly seen as an old Park. It’s already 16years old. So it need a bit of refresh. I don’t think we become late in doing that infact in any kind of investment for e.g. in Cochin we have to do a Roller Coaster it’s a 25 to 30 crore investment so unless it really needed we don’t want to do it. we already bought some property extra which is done last year but that conversion and this integrating into our Park area is happening now. So now is the good time to add Rides to Kochi which for example there was no space for us to add a Roller Coaster until 6 months back, we never had the space for it. So those constraints are also there in place like Kochi. And then on to top of that we have issues you know like compute and things like that.
• The Roller Coaster that we are thinking of buying it will take us at least another 6 months and we will be able to open it only by the end of this financial year. So this year, in addition to that we are adding two more attractions we should be ready by October. So I think that will help us creating a new Marketing Campaign and reinvigorate the
Growth, Capex, Cross-Sell/Upsell Guidance:
• The existing Park of course I expect 3 to 4% considering the present situation in the next five years. You take a five year CAGR growth, I think the footfall can grow by 3 to 4% only.
• The new Parking Hyderabad can contribute around average of 10 to 12% for the next five years and by the time I expect Chennai also to functional from FY19 with a footfall something better than Hyderabad.
• Chennai property, we will have an average CAPEX of around 170 crores in the coming year FY 17. That depends on when we are closing the Chennai property and existing Park Hyderabad probably we will spend around Rs 30 to 40 crores and around Rs 30 to 35 crores we expect to spend in Kochi.
• 150 to 170 cr. will be the average spend of this year FY 17.
• In Hyderabad, we are investing Rs 250 crores and we spent only Rs 225 crore so far. So those two will continue and Kochi we are investing around Rs 30 crores that we expect to regain the footfall of around 1.5 lakh which will give an additional revenue of Rs 15 to 18 crore to us
• Hyderabad has around 71% in the collection from ticket and 29% from Non-Ticket.
• So, in next 2 years, when we takeover all the Restaurants in Kochi and Bangalore and we will be looking for a mix of something close to 30% to 32% from Non-Ticket revenue.
Online Digital and Marketing Plans:
• We have no track of absolute repeat customers. We are tracking them through the loyalty program that we run and we have around 1.3 lakh cards in circulation and that card when used that is the area where we get exact number of repeat, but what we have we feel Bangalore we have around 40 to50% repeat customer. Repeat I mean not in the same year but those repeat after 3-4 years.
• In immediate future we don’t want invest in biometric and similar kinds of things but currently now we are first trying to make maximum bookings through online. Because you look at Parks outside there are maximum bookings is online Ticket. So we have not reached that level that is our identification on that.
• That is where we can offer to the plan where we have online available now we are promoting the online booking and digital marketing are on the high priority for us. These two will enabled us to get more Mail ids and communication possibility to those customers. Currently we have very limited in that probably we will have mail box of close to around 2 lakhs customers only.
• Future growth numbers of footfall need to be revisited
• There is tendency of footfall reduction once parks are 10 year old
• Price Elasticity Impact assessment is required
• Cross-sell opportunities looks good and may give better feel to valuations
• Still, there is scope for incremental revenue as current efforts does not involve any sort of major CRM, digital or analytical based marketing focus
• Hyederabad initial footfall may be due to buzz and as Hyderabad already has multiple parks, future numbers may set long term trend
• A friend of mine visited Hyderabad park and liked overall location of park and the rides
• Going forward, for next 2-3 years, there might be slight stretch in debt equity ratio, though, it should stay under comfortable limits
• Disney is known for data driven customer management. Seeing current fll in footfall, may be time has come for wonderla to do an intelligence based customer management, pricing management
• Growth assumption numbers and cross-sell/upsell assumption numbers in valuation models may need a re-look
Disc : Invested with 2% of portfolio. The views are not meant for recommendation in any sense. Use your own discretion