Dubai Parks and Resorts financial loss widens

12/08/2016 10:18 AST

Dubai Parks and Resorts reported a widening second-quarter loss as spending rose in the run-up to the park's partial opening on October 31.

The company said it expects to generate about Dh297 million in income this year, when it anticipates 900,000 visitors within the two months it will operate.

Dubai Parks and Resorts' loss in the three months to June 30 reached Dh59.5m, compared with a loss of Dh15.5m a year earlier, it said.

The company, which is building a Dh10.5 billion theme park, is projecting Dh2.4bn in revenue in its first full year of operation next year, rising to nearly Dh3.1bn by 2019. It expects to declare a net loss of Dh36m in its first full year of operation, then a Dh108m profit in 2018 and a Dh249m profit in 2019.

The company said that it intends to open its gates for phase one of the project to the public on October 31.

"Construction of the destination is now moving into the final stage as we move into our pre-launch phase," the chief executive Raed Al Nuaimi said in the statement.

By the end of June, 93 per cent of the site's infrastructure had been completed, 84 per cent of the ride systems were built and 80 per cent of the site's overall facilities were completed.

Dubai Parks and Resorts sold shares to the public in November 2014 to help pay for its construction, raising more than Dh2.5bn. About 60 per cent of its shares are held by developer Meraas Holding, with the remainder in the hands of institutional and retail investors. A further Dh1.6bn was raised in May this year for a second phase of development, which will contain a Six Flags-branded theme park. Work started on that project last month and is due to be completed in late 2019.

The first phase of the park opening in October will include a Legoland theme park and water park, a Bollywood Parks Dubai and a Motiongate Dubai theme park, as well as a Marriott-operated Lapita hotel and a Riverland area with retail and dining outlets.

This initial phase has cost just over Dh10.5bn to build - Dh6.3bn of which has been provided by its shareholders and Dh4.2bn through debt financing. Dubai Parks and Resorts said that the total value of its assets now stands at Dh11.6bn.

Ayub Ansari, a senior analyst at Securities & Investment Company in Bahrain, said that it is "very comendable" that park bosses had largely stuck to the ambitious time frame announced in 2014. However, his target price for the com­pany's shares remains at Dh1.25, which is considerably below the Dh1.74 it was trading at by midday.

"Once the park opens, the thing to watch out for is the footfall - whether it is in line with what they have projected, or much better. Because the current market price seems to be implying a very high growth rate for park arrivals. I'd like to see those numbers first before committing to a higher value or revising my estimates."

The National