Shanghai Disney: JPMorgan Deep Dives The House Of Mouse Theme Parks

Walt Disney Co DIS is expected to open its brand new Shanghai Disney Resort in mid-June, and J.P. Morgan analyst Alexia Quadrani believes the park will provide a shot in the arm for Disney’s international business.

According to Quadrani, about 300 million people live within a three-hour travel radius of the new park. Her preliminary conservative estimates are that the park will host abot 12.5 million guests in its first year of operation which will spend an average of about $70 each per visit. In addition, J.P. Morgan is predicting hotel occupancy of 75 percent and average room guest spend of $325.

Overall, J.P. Morgan projects that Shanghai Disney will generate roughly $1 billion in revenue and $50 million in operating income in fiscal 2017, numbers which will continue to grow in time.

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“With ongoing healthy domestic trends and the opening of Shanghai Disney Resort likely to fuel international growth over time, we are bullish on this division and expect a F2015-F2017E domestic operating income CAGR at ~11% with margins expanding ~230bps and international operating income growth from -$45m to $220m with further margin expansion over time,” Quadrani explains.

J.P. Morgan maintains its Overweight rating on Disney and names it one of the firm’s top media stock picks.

Disclosure: the author holds no position in the stocks mentioned.