• AQUAWALK's 2QFY26 core net profit came in at RM4.7m (-44.5% QoQ), bringing 1HFY26 core net profit to RM12.7m, or just 34% of our full-year forecast, below our expectations, mainly dragged by a sharp 26.1% QoQ decline in Aquaria Phuket visitorship amid persistently softer international travel demand.
• We remain cautious near-term given persistent international travel softness, though we see potential earnings catalysts from the Immersive Art Studio launch in Thailand and a stronger 4QFY26 as management works to protect margins amid these headwinds.
• We cut our FY26F/FY27F/FY28F earnings forecasts by -9%/-9%/-11% to RM33.5m/RM37.5m/RM31.6m.
• Maintain our BUY call on AQUAWALK with a lower TP of RM0.25 (from RM0.27), based on an unchanged 12.0x FY27F P/E multiple applied to our revised FY27F EPS of 2.00 sen (from 2.2 sen).
Results below expectations. After excluding Realised loss on foreign exchange (+RM0.46m), Fair value gain on short-term fund (-RM0.926m), Unrealised forex gain (-RM0.458m) and Realised forex gain (-RM0.008m), AQUAWALK's 2QFY26 core net profit came in at RM4.7m (- 44.5% QoQ), bringing 1HFY26 core net profit to RM12.7m. The results were below our expectations, accounting for only 34% of our full-year forecast, mainly dragged by a sharp 26.1% QoQ decline in Aquaria Phuket visitorship amid persistently softer international travel demand.
QoQ. Revenue declined 5.5% QoQ to RM23.9m and core net profit fell 44.5% QoQ to RM4.7m, primarily reflecting lower visitorship, with total group visitorship down 1.8% QoQ to 331,593 as geopolitical uncertainties continued to weigh on international travel demand, particularly among higher-yielding foreign tourists.
YoY. Since Aquawalk was only listed in November 2025, no YoY comparison is available.
Dividend. The Board declared its first interim dividend of 0.5 sen per share (RM9.2m) for 2QFY26, with an ex-date of 9 September 2026 and payment on 30 September 2026 (FY25 DPS:1.0 sen).
Outlook. We turn more cautious on Aquawalk's near-term prospects, as persistent softness in international travel demand has yet to show clear signs of stabilisation. Management continues to flag ongoing tensions in the Middle East and broader regional macroeconomic concerns as key headwinds to inbound tourism, while remaining focused on protecting topline margins amid these pressures. Management guided that, the weakness is not only limited to Middle Eastern travellers, but also the Aquaria KLCC is likely to experience a broader pullback in inbound visitorship. To support footfall, the Group is running a "Buy 1 Free 1" promotion from late August to early September, representing a more aggressive marketing push compared with last year's free entry offer for August-born visitors. At Aquaria KLCC, Discovery Zone 6 has completed construction but is pending official Bomba approval prior to opening, with no firm timeline confirmed. This will be followed by the Penguin Tank attraction, which remains targeted for 1QFY27, with the RM7.0m budget unchanged. In Thailand, the Immersive Art Studio ("Maya Recall Museum"), developed in collaboration with KNOWCK Co., Ltd. under a revenue-sharing model, remains on track for launch by endSeptember 2026. Management is hopeful for a stronger 4QFY26, although this remains contingent on the absence of further major macroeconomic shocks. Looking further ahead, Aquawalk's longer-term growth is expected to be supported by its Jawa Timur Park oceanarium in Indonesia, which management continues to target at approximately 300k visitors and RM11m in revenue in its first year of operations. With RM171.8m in cash and short-term funds and no borrowings, the Group remains well-funded to execute its expansion pipeline, even as it begins returning cash to shareholders through its first interim dividend this quarter.
Earnings Revision. We cut our FY26F/FY27F/FY28F core net profit forecasts by -9%/-9%/-11% to RM33.5m/RM37.5m/RM31.6m (from RM37.0m/RM41.4m/RM35.7m), mainly to reflect the sharp decline in Aquaria Phuket visitorship amid persistent softness in international travel demand.
Valuation & Recommendation. We maintain our BUY call on AQUAWALK, with a lower TP of RM0.25 (from RM0.27), following our earnings downgrade. Our TP is based on an unchanged 12.0x FY27F P/E multiple, applied to our lower FY27F EPS forecast of 2.00 sen (from 2.2 sen). Our positive stance is underpinned by (i) Aquaria KLCC's still-resilient performance despite broader regional travel headwinds, (ii) a potential improvement in Aquaria Phuket's outlook following the launch of the Immersive Art Studio by end-September 2026, and (iii) the Group's healthy net cash position, which enabled its first interim dividend this quarter despite a softer earnings base.
Risks. Prolonged softness in international travel demand, delays in regulatory approvals for new attractions, and execution risks on its regional expansion pipeline.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.065852 | 4.097386 |
| EUR | 4.589381 | 4.597416 |
| CNY | 0.610175 | 0.610647 |
| HKD | 0.518032 | 0.522054 |
| SGD | 3.177971 | 3.202709 |