Revenue forecast for Kingsmen's exhibitions segment to fall 20%

Management still scrambling for theme park deals.

According to CIMB, KMEN’s FY12 revenue was S$290m, showing growth across all four segments. Consensus estimates that KMEN will post revenue of S$318m in FY13, and $350m in FY14. 

CIMB noted that it believes the consensus FY13 figure is overly optimistic due to the lack of theme park contracts in KMEN’s orderbook.

"We expect revenue for the Exhibitions & Museums segment to fall by ~20% in FY13, while growth in the other three segments (Interiors +11%; R&D +17%; Alternative Marketing+22%) would merely just compensate for this decline," said CIMB.

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As such, we expect FY13 revenue to come in at ~S$290m (flat yoy growth). Management’s confidence that it will secure at least some work for the
Shanghai Disneyland (likely 2H13) means that KMEN should deliver earnings growth for FY14 and FY15.

Shanghai Disneyland is expected to open in December 2015 after the completion of Phase I of the resort’s development - a theme park, two themed hotels, an entertainment district and other recreational facilities. Two additional theme parks are expected to be built in future phases of development.

The Shanghai Disneyland site covers a massive total area of 963 acres, almost 20 times the size of Universal Studios Singapore, which only takes up 49 acres.

Taking the total value of S$109m in contracts that KMEN secured from Universal Studios Singapore as a guide for the Shanghai Disneyland contract, we think that a very conservative estimate of Shanghai Disneyland contracts will be cumulatively 1.2x of the USS orders, or S$131m,spread over FY14 and FY15.

Taking similar growth rate assumptions for the non-Exhibition segments, we estimate that revenue of S$380m for FY14 is quite plausible if KMEN starts winning parcels of the Shanghai contract and the value of contracts in Shanghai are only 1.2x USS.

Consensus only expects  S$350m in revenue for FY14. Despite the run-up in share price this year, we think that estimates have yet to fully factor in the Shanghai Disneyland contract.