About the Company

Wonderla Holidays is engaged in the business of Amusement Parks and Resort.

Q3 2021 Updates

Financial Results & Highlights

Consolidated Financials (In Crs)
  Q3FY21 Q3FY20 YoY % Q2FY21 QoQ % 9MFY21 9MFY20 YoY%
Sales 6 73 -91.78% 2 200.00% 10 238 -95.80%
PBT -19 33* -158% -20 -5.00% -60 77* -177.92%
PAT -15 21 -171% -16 -6.25% -45 63 -171.43%

*Contains exceptional item of Rs 15.56 Cr

Detailed Results

  1. The company saw revenues stay down in Q3 as well due operating at 50% capacity from 15th Oct in Q3.
  2. Bangalore park opened on 13th Nov with parks open only on weekends and holidays.
  3. Kochi park was opened on 24th Hyderabad park opened on 7th Jan.
  4. Bangalore Park achieved footfalls of 36,121 and Kochi Park achieved footfalls of 8,591 during the period. Total footfalls were 44,712.
  5. In Wonder Kitchen, the company opened up new branches in Bangalore and Kochi in Q2. Another branch was opened in Hyderabad in Sep. The company now has 4 branches in total.
  6. Wonderla Resort Bangalore was reopened for customers from 3rd October 2020 and saw occupancy of 12% and ARR of Rs 3169.

Investor Conference Call Highlights

  1. The management has stated that there were indeed some days when the park had to stop ticket sales as it would go above 50% mandated upper capacity at the Bangalore park.
  2. RPV during Dec 2020 for Bangalore park was at Rs 686 vs Rs 786 last year.
  3. The management reiterated that it needs 1300 customers per day per park to breakeven.
  4. The cash loss during 9M period is Rs 35 Cr. Cash levels as of 31st Dec 2020 stands at Rs 89 Cr.
  5. The management is optimistic of becoming cash breakeven soon. It is slowly progressing to staying open from Wednesday to Sunday from Feb onwards and may decide on March on whether to remain open all days.
  6. The parks have seen visitors numbering 4000-5000 at max on weekends while on weekdays the max number is around 1000.
  7. The management is confident of operating at 100% capacity once the regulatory cap is lifted but it expects this cap to stay in place for a while till vaccination drives succeed and COVID-19 cases don’t resurface.
  8. The situation in Chennai is still the same as last quarter and the negotiations on tax benefits have been put on hold due to local elections there.
  9. The company is not planning to expand the use of its open space for weddings as it doesn’t fit well with the target audience.
  10. The company had been paying employees 50% of salary when parks were closed. Now they are paying 75% of salary and will slowly come back to 100% as it starts to stay open more days of the week.
  11. The company is postponing all new expansions and is focusing on opening up existing parks to the full currently.
  12. The management is confident of biding its time and roughing out the tough times better than its competitors due to its robust balance sheet and good operations.
  13. Wonder Kitchen is still not profitable and is doing sales of Rs 6-7 Lacs per month in Q3 in Kochi.
  14. The management doesn’t expect the Wonder Kitchen vertical to breakeven in Q4 as well.
  15. Once all parks are open, the company expects monthly expenses run rate of Rs 9-9.5 Cr.
  16. The management is not looking at any means of raising cash as it still has enough cash on books.

Analyst’s View

Wonderla Holidays is India’s leading amusement park operator. This business has strong entry barriers because of high Capex and long gestation cycle. Wonderla has been able to manage its operations well over the years and create a niche space for itself. The Quarter was subdued for Wonderla mainly due to the selective opening and the visitor caps imposed on the parks. The business for the first half of the year was fully impacted by nil operating revenue from park operations. In the meantime, the company has focused on cost-cutting measures and getting expanding the open days of the week. It has also put all expansion plans on hold and is focusing solely on improving existing park operations to their previous levels. The company now has 3 parks open in Bangalore, Hyderabad and Kochi and needs 1300 visitors per day per park to breakeven. It remains to be seen how much time it will take for normalcy to come back in their business. However, Wonderla has the resilience of the balance sheet to survive through these tough times and also the potential to positively surprise once all the parks are opened and the footfall comes to pre-COVID level.

 


 

Q2 2021 Updates

Financial Results & Highlights

Consolidated Financials (In Crs)
Q2FY21 Q2FY20 YoY % Q1FY21 QoQ % H1FY21 H1FY20 YoY
Sales 2 44 -95.45% 2 0.00% 4 165 -97.58%
PBT -20 -2 -900.00% -21 -4.76% -41 60 -168.33%
PAT -16 0 -15 6.67% -30 42 -171.43%

Detailed Results

  1. The company saw revenues stay down in Q2 as well due to a temporary shutdown of operations which started at 50% capacity from 15th Oct in Q3.
  2. Bangalore park opened on 13th
  3. Approval & SOP from Telangana Government is pending for Hyderabad park.
  4. In Wonder Kitchen, the company opened up new branches in Bangalore and Kochi in Q2. Another branch was opened in Hyderabad in Sep. The company now has 4 branches in total.
  5. Wonderla Resort Bangalore was reopened for customers from 3rd October 2020.
  6. Cash & cash equivalents for the company has come down to Rs 45 lacs in Sep from Rs 3.7 Cr in March.

 

Investor Conference Call Highlights

  1. George Joseph, the Joint Managing Director, has retired from active management due to the travel and health-related restrictions caused by the pandemic and is now a Non-Executive Director on the Board.
  2. Mr Arun Chittilappilly has taken over as the Managing Director.
  3. The company is in the process of an enterprise-wide digital transformation which should help increase efficiencies and help the creation of more interactive, dynamic, and immersive attractions, by understanding customer preferences through technologies like data analytics.
  4. In Q2, the company had test-launched a new initiative called Wonder Garden, which is a plant nursery-based offering. It offers a range of plants and — indoor and outdoor plants, which the company already has a garden set up in all of its parks for maintenance.
  5. The company has reduced its monthly expenses from Rs 10 Cr in March 2020 to Rs 3 Cr in Aug 2020.
  6. The company has opened parks in such locations only where it can stay open 365 days without much variance due to weather.
  7. The company already has a customer loyalty program with 1.5 lac members but it is a pre-digital system that is going to be digitized.
  8. Although merchandising is a big part of sales in the amusement park industry, the company is not actively focusing on it and is more focused on spur-of-the-moment sales of products in its parks.
  9. Breakeven footfall for the company is at 1300-1350 per park per day after reopening.
  10. In Bangalore, the park will be open only from Friday to Sunday and will be operating land rides only.
  11. The company has not been able to start work on the Chennai park and it will renegotiate that whole thing with Chennai Government because it feels that the LBT is an unfair tax burden on the amusement park. Once that clearance is approved, construction will start and then at that point, the company will decide whether it needs debt.
  12. The management doesn’t see a big-ticket investment in Odisha.
  13. The construction of a new amusement park takes around 18 months typically. The company has not gotten the govt approval to start construction in Chennai and is waiting on it to start the construction.
  14. The company has asked for a lifetime waiver of the tax LBT because it feels that the tax is too high and the renegotiation is still going on.
  15. The fixed assets in Chennai are valued at Rs 109 Cr including Rs 88 Cr for the land.
  16. The biggest issue in setting up amusement parks is the different tax issues in it. At the time of the company IPO, the tax on each ticket was at 5-8%. Because of GST, it has gone up to 18%. And some places like Tamil Nadu add on an extra tax of 10% bringing up the total tax on the ticket to 28% which is too high for a Capex heavy industry.
  17. Chennai Capex is expected to be at Rs 300 Cr while Odisha Capex is expected to be at Rs 100 Cr.
  18. The idea behind Wonder Kitchen was to keep some of its staff occupied and, with practically zero investment, generate an alternate source of income. This is a highly scalable model as it doesn’t have any requirements for prime real estate. It also provides the company with a high recall value which is important as the company has very low repeat business. The company is now concentrating on perfecting the business model first.
  19. The company will be using both its own app-based delivery system and third-party apps like Swiggy and Zomato. Around 30-40% of orders come from third-party apps.
  20. The company doesn’t have any issues with raising debt to fund expansion and in constructing new projects. The major roadblock in new expansions is local tax and approval issues which take a lot of time to get through.
  21. Currently, the company is manufacturing only for its own consumption. It can build rides and maintain them at a very low cost compared to its competitors. But the management does not see manufacturing as a big opportunity here.
  22. The company is on the lookout for new opportunities for operating existing parks. It is not willing to be an equity partner in them and is only looking at managing and running these parks.
  23. The company may look for partners or allies for adventure sports and activities but it will not pursue them on its own.
  24. The key criteria for selecting a location for the company to build parks are weather and population size in a 300-500 km radius.
  25. There are opportunities in other countries. Wonderla has been approached by Sri Lanka and Bangladesh as well. The company is exploring options to see whether it can partner up with someone for it in Sri Lanka.
  26. The company is open to Northern India but the issue here is the extreme weather which can force the open park to stay closed for 4-5 months. A better option at such places will be closed or indoor parks.

Analyst’s View

Wonderla Holidays is India’s leading amusement park operator. This business has strong entry barriers because of high Capex and long gestation cycle. Wonderla has been able to manage its operations well over the years and create a niche space for itself. However, COVID-19 played a spoilsport for them. The business for the first half of the year was fully impacted with nil operating revenue from park operations. In the meantime, the company has focussed on cost-cutting measures. They also improvised by venturing into the Wonder Kitchen segment. It serves two purposes: keeps the employees engaged and also gives some much-needed revenue. However, it is too small and the business model is still evolving. The Bangalore park was reopened on 13th November after complying with all COVID-induced restrictions. It remains to be seen how much time it will take for normalcy to come back in their business. However, Wonderla has the potential to positively surprise once all the parks are opened and the footfall comes to pre-COVID level.

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