Wonderla Holidays

Stock Opportunities Untested - but worth a good look
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Chennai Wonderla:

Competitors:

  • There are already 4 players in chennai: Queensland, Kiskinta, MGM and VGP. Queensland is the market leader who have 200 acres of land bought around 50000/acre. Have lot of pricing power on the lower side. Ticket price was 350 rupees last year, now revised to 550.

Location:

  • Wonderla is going to be in Thiruporur on the OMR road. OMR road itself far-off location and Thiruporur is even off in that road. 55KM from Koyambedu bus stand or 42 KM from Guindy.

Except that the adjacent road ECR already having 2 theme parks (MGM and VGP). Other side adjacent road ( GST road ) there is another theme park called Kiskinta. So it is going to be 4 theme parks in South Chennai once Wonderla comes.

  • None of these parks can beat the location of Queensland which is very near to city ( 22km from Koyambedu & you have to cross queensland to enter Chennai, so handy for visitors from other districts ). But it is tough to buy land there due to cost and to compete with Queensland.

Performance:

  • Queensland seems performing very well. On Gandhi Jayanthi leave had 10k footfalls and on Kanum Pongal festival clocked a record 15k footfall. On holiday seasons getting around 5k footfall, in weekdays might be around 2k. All other theme parks are performing poorly comparing to that. It seems MGM had 5k footfalls on Kanum Pongal which is their highest number of footfall in years.

  • Wonderla will beat down MGM, Kiskinta and VGP. But Queensland will continue to be market leader. After the initial euphoria dies down, Wonderla might be able to clock an avg of 2k footfalls a day.

Risks:

  • A new park called EVP started just opp to Queensland but closed down due to accidents and aftermath didn’t handled properly. So accidents can be a big threat. Needs to have political clout and learn the art of greasing the local political hands when different issues arise.

My View:

  • High capex business.
  • Business is very easy to understand & predict return.
  • Growth will be average but consistent in long term.
  • There will be lot of hard cash flow. Management reputation is very important - which is very good in Wonderla’s case.
  • No one can be moat in this business due to nature of the industry.
  • Wonderla may be the only one organized player in the industry but they may have strong competition from regional players due to first mover advantage.
  • Invest for long term. Buy when share price falls.

Disclosure: Have positions for tracking.

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