Oriental Land’s share price has recovered to near its previous highs. While the October ticket price revision and new initiatives such as the planned launch of Disney Cruise are viewed as potential drivers of future profit growth, the company’s forecast for lower full-year profit, higher costs and the impact of insufficient attendance also warrant close attention.
The rebound following the 1Q results has continued, with the share price recovering to the levels seen at its September high. An increase in attendance and higher spending per guest lifted revenue and operating profit. 1Q revenue rose 10.4% year on year to ¥180.7 billion, while operating profit increased 23.1% to ¥47.7 billion, with both reaching record highs. At the same time, preparations are under way for price revisions and new attractions aimed at driving profit growth from the next fiscal year onward, but the full-year forecast for lower profit remains in place, leaving higher costs as a concern.
The key points from the second paragraph onward are as follows. The recovery to near the previous high represents an approximately 50% rebound from the May 2024 low, making the sustainability of earnings and profits essential for the share price to continue rising. At a July briefing, the company outlined plans to review prices and prepare new attractions with a view to profit growth from the next fiscal year onward, but it has not yet raised its full-year earnings forecast in its results announcements. In addition, the impact on supply and demand may vary depending on the scale of any future sales of Keisei Electric Railway’s holdings.
The key points in the third paragraph are as follows. Disney Cruise is scheduled to launch in spring 2029, and the ship will be named Disney Imagination. The launch date will not directly translate into earnings, but the cruise is expected to become a long-term growth driver as a new business. Paid services were expanded and prices revised in September, with an impact expected from 3Q onward. Meanwhile, the timing differences in expense recognition and increases in personnel and repair costs remain challenges, and full-year profit margins have not yet improved.
The key points in the fourth paragraph are as follows. EPS growth will be crucial to extending the share price’s upside, while the forward PER is in the mid-40s. Recovering past peak levels will require either higher EPS or a higher valuation multiple, making it necessary to assess the effects of price increases separately from the contribution of new businesses. Overall, the scope for medium- to long-term growth needs to be assessed with a focus on growth in spending per guest and profit.