KUALA LUMPUR (Aug 16): As a result of the release of the Pokemon GO in Malaysia, retail real estate investment trusts (REITs) are expected to remain market outperformers, with Sunway REIT seen as providing the best upside, according to UOB Kay Hian research.
In a strategy note today, UOB said the hugely popular augmented reality game, which was launched in Malaysia on Aug 6, has created higher footfall in malls.
“Although turnover revenue accounts for only less than 10% of retail REITs revenue, sustained higher footfall leads to better rental reversion.
“Sunway REIT has reportedly experienced a double-digit hike in average footfall at its malls with car count increasing by 10%. Similarly, Suria KLCC and Pavilion have also garnered attraction from Pokemon GO hunters,” said the research firm.
As for the food and beverage (F&B) retailers, UOB Kay Hian said the impact of Pokemon Go to them is neutral at this juncture.
“F&B retailers like Starbucks, OldTown and other F&B retail chains surveyed saw minimal impact with sales being consistent before and after Pokemon GO’s launch.
“Nevertheless the higher footfall in malls and shoplots could eventually translate into higher sales for F&B retailers,” said UOB Kay Hian.
As for convenience stores, UOB Kay Hian said the impact ranges from neutral to positive.
“KK Supermart & Superstore Sdn Bhd, which operates a chain of 223 convenience stores in shoplots, has reportedly seen a surge in footfall, with the sales of some stores shooting up by up to 20%.
“Approximately one-third of both 7-Eleven Malaysia Holdings Bhd and Bison Consolidated Bhd's stores are located in the malls. The higher footfall in the malls may translate into higher sales for these convenience stores.
“However, we note from these companies that at this juncture, impact to earnings is minimal,” said UOB.
The telecommunications industry could potentially see marginally positive impact from higher data usage and pre-paid reloads due to the game. However, UOB noted data usage required for Pokemon GO is generally modest, at a rough gauge of 10MB per day for active Pokemon hunters.
Meanwhile, the firm noted Pokemon GO may have a long term positive impact for the technology sector.
“Pokemon GO hastens the adoption of smart phones, currently accounting for circa 30% of global mobile phones. This in turn benefits the smart phone component contract manufacturers, such as Inari Amertron Bhd,” said UOB.
In short, UOB said the game, which promises by far to be the highest revenue grossing game in history, can provide at least a short term lift to Malaysian companies.
“Although widely seen as a fad, this game’s shelf life could well exceed common expectations; 90% of players who downloaded the app continue to play a month after its launch, according to a media report,” said UOB.