Investors Bet Tokyo Disneyland’s Rebound Will Pick Up Pace
Markets Already Betting on Tokyo Disneyland’s Return to Normal
(Bloomberg) -- Some investors are betting that a market rebound for Tokyo Disneyland, one of Japan’s top tourist spots, will pick up pace given its financial strength to weather the pandemic.
Shares in the operator of the amusement park, Oriental Land Co., hit the highest since June last week and are up about 17% from an August low. And in the debt market, the company’s sale of 100 billion yen ($943 million) of bonds last week met with strong investor demand, according to underwriters, even after it posted an operating loss.
Serious challenges remain for the theme park industry globally of course, but as economies take gradual steps to reopen and market stimulus helps spur risk-taking in equity and credit markets, some investors figure that those hurdles won’t derail the recent rally. Japan Credit Rating Agency Ltd. has kept its AA grade for Oriental Land, the third-highest score, saying that the firm’s strong capacity to attract visitors and solid financial base will help its business recovery.
More issuers have taken advantage of hot credit markets to stockpile cash and the Disneyland operator is no exception. Its sale of five-year, seven-year and 10-year bonds last week was its biggest yen deal in over two decades. Orders exceeded the amount of notes sold for all the tranches, with demand for the five-year debt coming to 1.8 times the securities offered, according to the underwriters.
While not all analysts are optimistic and some have been lowering their targets and earnings outlook, others forecast a rebound in business. The pandemic forced the company to close its two amusement parks, Disneyland and DisneySea, for four months earlier this year, and it reopened them on July 1.
Hirofumi Oda, a senior analyst at SMBC Nikko Securities Inc., projects that visitors to the parks will rise to 28.5 million in the next fiscal year starting April 2021 compared with 12 million in the current 12-month period. There were about 29 million visitors last fiscal year, Oriental Land data show.
Oriental Land spokeswoman Ryoko Nagashima declined to comment on the company’s outlook, saying it’s planning to release a comment at its second-quarter earnings.
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