Berjaya Sports Toto (BST) reported a net profit of RM53.3m for 2QFY22, down 18.1% YoY due to lower contribution from its gaming operations. For 1HFY22, the Group’s net profit of RM35.6m only accounted for 26% and 24% of our and consensus full-year estimates, respectively. Nevertheless, we are keeping our earnings forecast unchanged as 1HFY22 performance was largely dragged by the nationwide lockdown that took place during 1QFY22 which led to the Group incurring RM18m losses. We believe earnings momentum would improve in 2HFY22, as we do not expect the government to reinstate lockdown measures in dealing with the current wave of Covid- 19 outbreak. A second interim dividend of 1sen per share was declared (2QFY21: 2.5sen per share). Maintain Neutral on BST with an unchanged TP of RM2.15.
- 2QFY22 revenue was flattish at RM1.2bn, as the growth in the motor division was offset by the drop in gaming revenue. HR Owen registered an 18.1% revenue growth due to higher sales in the used car segment, benefitting from market tailwinds caused by the shortage of new car supply. However, Sports Toto Malaysia (STM) posted a 13% drop in revenue due to softer recovery in ticket sales after it resumed operations on 14 September 2021. Sales were also affected by stricter standard operating procedures introduced at its outlets.
- 2QFY22 net profit fell 18.1% YoY. In tandem with a decline in sales and compounded by a higher prize payout, STM’s pretax profit dropped by 26.4% YoY. This was partly mitigated by an increase in HR Owen’s contribution (+38.2% YoY to RM15.5m) due to better profit margin (2.9% versus 2.6%).
- Outlook. Since the resumption of its operations in September 2021, revenue has so far recovered to 80% of pre-pandemic level. We expect earnings momentum to improve in the coming quarters, hence we retain our full-year FY22F forecast of RM136.6m. Nevertheless, we are projecting a 25% decline from FY21 mainly due to losses incurred in 1QFY22 during the lockdown period.
Source: PublicInvest Research - 23 Feb 2022