Highlights

Berjaya Sports Toto - 1QFY13 Results In Line

Date: 19/09/2012

Source  :  HLG
Stock  :  BJTOTO       Price Target  :  4.50      |      Price Call  :  HOLD
        Last Price  :  3.48      |      Upside/Downside  :  +1.02 (29.31%)
 


Results

  • BToto reported 1QFY13 PATAMI of RM110.7m, accounted for 26.9% and 26.7% of ours and streets’ full year forecasts respectively. We consider this in-line as the Group reported RM8.8m realized gain in quoted investments. Stripping it off, BToto’s PATAMI would be RM102.2m, accounted for 25.4% of our full year forecasts.
  • Earnings are also affected by seasonal factors whereby 4QFY13 will incur stronger sales from Chinese New Year, but will be offset by the slightly lower sales in 2Q and 3Q.

Deviations

  • Largely in-line.

Dividends

  • Declared first interim dividend of 6.5 sen per share (1QFY12: 8 sen), translating to 77.6% dividend payout. This is in-line with our projection of a total of 25.9 sen or 85% payout in FY13.
  • The ex- and payment date have been set on 5 Oct and 16 Oct 2012 respectively.

Highlights

  • Yoy: Gaming revenue jumped 6% despite the same number of draw days, mainly from the strong sales of Power Toto 6/55 given the attractive jackpot price of >RM20m (sales/draw was RM650-900m or 18-50% higher than the normal range of RM550-600m). Note that this is the highest jackpot price for Power 6/55 since its launch in Oct 09. 1QFY13 also includes full 3 months sales contribution from 4D Jackpot, compared to only 1.5 months in 1QFY12.
  • PATAMI recorded a higher growth yoy (+20.2%) compared to revenue on the back of lower prize payout ratio of 61.5% whereas 1QFY12 and 4QFY12 each has a prize payout ratio of 62.4%.
  • Qoq: Gaming revenue was relatively flat due to the lower sales recorded from its 4D, 5D and 6D games. 1Q usually records lowest sales during the year. However, we estimate that its 4D sales have stabilized while Magnum continues to experience further decline in its 4D sales.
  • To date, BToto’s market share of 4D Jackpot stands at 43.2% with average sales per draw of RM1.89m.
  • As for the proposed transfer of the Group’s 100% equity interest in Sports Toto Malaysia Sdn Bhd to STM-Trust, the Controller of Foreign Exchange of BNM has approved the application by the Company to make investment abroad.

Risks

  • Higher-than-expected prize payout ratio.
  • PMP to possibly launch its own 4D Jackpot.
  • Hike in pool betting duty/gaming tax.

Forecasts

  • Maintained.

Rating
HOLD 

  • Positives – (1) 4D Jackpot continues to show stabilized sales vs. decline previously (2) Monopoly of lotto games; (3) Highest-yielding stock in the gaming sector.
  • Negatives – (1) Highly regulated industry; (2) Prize payout dependable on luck factor; and (3) listing of business trust dilutive to earnings and attracts holding company discount.

Valuation

  • Target price remained unchanged at RM4.50 based on SOP valuation. Maintain HOLD.

Source: Hong Leong Investment Bank Research - 19 Sep 2012

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