The problem with Komtar

From the Edge:

Only World Group Bhd
(April 22, RM2.33)
Maintain add with a higher target price (TP) of RM3.02: In a recent group meeting that we organised between fund managers and Only World Group Bhd’s (OWG) management, we learnt that Komtar would be a themed attractions-based destination.

Its net lettable area (NLA) has doubled and the space will be fully taken up by end of 2015.

We raise our financial year ending June 30, 2016 (FY16) and FY17 earnings per share (EPS) forecasts by 12% to 18% to reflect higher rental revenue from the Komtar space and higher projected revenue from the observation deck on level 64.

Our TP is raised to RM3.02, still based on 19 times calendar year 2016 price-earnings ratio (PER), 20% discount to the food and beverage (F&B) sector’s target PER.

As a Penangite, I've seen a lot of the shopping complexes in Penang.  Komtar is one of the first large shopping complexes in Penang.  It's been renovated and remodelled multiple times.  Although I do find myself going there once in a while it is not usually to enjoy the place.  I'm there usually to pick up some items that can be found as one of the cheapest in Penang.

I assume Only World can really do a good job with Komtar.  They can make it wider and open with higher ceilings that could entice even those with heavy claustrophobic tendencies.

But Penang alas is not like any other cities in Malaysia.  What takes mere 10 minutes drive to the neighbourhood shopping mall could end up taking 20-30 minutes in Penang.  In order to get to this shopping center, I would have to travel in massive traffic jams.

Queensbay mall is a decent mall due to its location off the highway.  It is relatively in  a good location.  Unfortunately, Komtar is not.  In Penang, accessibility is key.  Komtar, Prangin mall are due to abysmal real estate for shopping centres because it's incredibly hard for residents to get to these areas.