Search Data Bodes Well For Disney's (DIS) Shanghai Park Opening - Piper Jaffray

Piper Jaffray analyst, Stan Meyers, thinks Disney (NYSE: DIS) is on the verge of a transformative shift in its positioning in China. The opening of its first mainland China theme park on June 16th will not only re-accelerate the pace of growth for the Parks & Resorts division in our view, but also help to promote its core brands (Lucasfilm, Marvel, Pixar, Disney Animation). No change to Overweight rating or $120 PT based on a 5 yr DCF (6.8% WACC, 10x term EBITDA multiple).

The analyst teamed up with the PJC Web Analytics team to analyze the sustainability of the demand for Shanghai Disneyland. Key takeaways:

1) The attendance across Shanghai/HK theme parks is highly correlated (94%) with their related search volume

2) Shanghai Disneyland search volume is up 256% over the past 3 months and is now 5x HK Disneyland

3) Shanghai Disneyland search interest is more broadly spread out across five major provinces, pointing to strong sustainable demand

4) HK Disneyland and Shanghai Disneyland see limited overlap in search

Baidu's search volume looks to be a compelling indicator of theme park attendance across China and Hong Kong. Based on Piper's analysis, Baidu's data is highly correlated (94%) with China/HK theme park attendance. Importantly, Shanghai Disneyland's search volume is up 256% over the past 3 months and as of March is ahead of the nearest 6 theme parks combined (HK Disneyland, HK Ocean Park, Chimelong Ocean Kingdom, Chimelong Paradise, Songcheng, Shanghai Happy Valley). Interestingly, the comparison of Shanghai Disneyland's search volume to the peak of the most recently opened theme park in mainland China-Chimelong Ocean Kingdom (2014)-supports our thesis with Shanghai Disney's volume 7x Chimelong's levels.

For an analyst ratings summary and ratings history on Walt Disney click here. For more ratings news on Walt Disney click here.

Shares of Walt Disney closed at $98.68 yesterday.

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