Icon8888 Gossips About Stocks
(Icon) BJ Toto - Recent Sell Down Provides Opportunity To Gain Exposure In Vietnam Lottery Boom
1. Introduction
Not too long ago, BJ Toto released a poor set of results.
This caused share price to decline to all time low of RM2.80.
However, upon closer examination, the group's poor result was mostly due to unusually high tax rate of 43%.
The company explained that it was due to additional GST adjustments amounted to RM15.6 mil.
By adding back the RM15.6 mil, January 2017 quarter's net profit should be RM64 mil, more or less the same as previous quarter.
In short, the sell down is not justified.
2. Kicking Ass In Vietnam
What I mentioned above was not sufficient to motivate me to buy into BJ Toto. Fair enough, the market has unfairly penalised it by pushing share price down from RM3.20 to RM2.80. But that represents upside of only RM0.40, or 14%. Not very exciting.
What got me excited was how well its Vietnam venture is doing.
Just to recap, in January 2016, Berjaya Corp announced that the Vietnamese government has granted approval for its lottery business in Vietnam.
https://klse.i3investor.com/blogs/icon8888/91007.jsp
The lottery business was officially kicked off in July 2016.
How has it been doing ?
Doing well. VERY VERY WELL.
As mentioned above, by December 2016, Vietlott was chalking up daily sales of VND14.2 billion. How much was that in Ringgit ? That was RM2.7 mil per day. Multiplied by 365, that translates into annual sales of RM990 mil.
Was that a lot ? Yes.
Last year, BJ Toto chalked up total sale of RM5.5 billion. Within 5 months after launch, Vietlott has already grown to 18% of BJ Toto's revenue.
And this is just the beginning. I don't have the exact numbers of outlets / terminals already set up. But the entire program is supposed to be rolled out over 5 years (now only 0.5 years) to ultimately reach 10,000 terminals. Based on straight line extrapolation, annual sales could reach betwen RM5 billion to RM10 billion per annum.
Vietnam's GDP per capita is still very low. Even 5 years later, it will still have plenty of room to grow. Even if the number of terminals are capped at 10,000, we can expect lottery sales per terminal to continue to grow over many, many years.
The potential is mind boggling.
3. Which One Is Better Proxy ?
In the above section, I discussed how well Vietlott has been doing. The question now is which counter should I buy ? BJ Corp has 40% effective interest in Vietlott, BJ Toto has only 10%.
After giving due consideration, I decided to put my money in BJ Toto and BJ Corp on 3 : 1 ratio.
The reason I bought more BJ Toto is because I don't really like BJ Corp's high borrowings and lack of direction.
(Back in early 2016, I bought BJ Corp at about 40 sen+. But later sold it at a small loss after losing patience with it. I have also conducted a detailed study of the group and found that it has many weaknesses that I don't like. Neverthelss, at current price of 35 sen, the stock does looked interesting, especially now that Vietlott has been doing so well. However, as usual, patience is required for this group)
https://klse.i3investor.com/blogs/icon8888/99942.jsp
4. Concluding Remarks
I will have to admit that BJ Toto is not really the kind of stock that people buy into during the existing bull market. It is not really that sexy.
However, after the recent strong Bursa performance, I am turning a bit cautious (not to say that I am bearish). I look for stocks that has not gone up much and has reasonable potential.
I am hoping of buying into BJ Toto such that when next quarter result comes out and if thing is back to normal, it can go back up to RM3.20.
By 2018, with a bit of luck, hopefully share price can go up by another 20 sen (to RM3.40) if Vietlott continues to do well and more and more investors find out about that.
BJ Toto declared 19 sen dividend last financial year. I am hoping maybe it can declare at least 16 sen going forward. Coupled with share price of RM3.40, I am hoping I can end 2018 with total value of of RM3.56.
Based on original cost of RM2.80, a gain of 27%.
Good enough for a low maintenance old man like me.
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Discussions
6 people like this. Showing 50 of 50 comments
Can you explain which figure you are referring to in the Vietlott website ?
Ricky Kiat http://vietlott.vn/en/
Bro icon888, base on the recent lottery result from vietlott website , the sales already go down since early 2017(maybe due to local lottery company increase the winner prize).but third game may launch this july.
08/05/2017 12:04
2017-05-08 14:19
Very enticing article. I've been monitoring this counter for some time. Entered a bit after reading this. Need some defensive stocks in my portfolio and this article just provided some level of comfort. Thanks!!
2017-05-08 15:28
bro icon888, total number prize (1st-3rd) of jackpot & 4D is lower (compare late 2016 & early 2017).
jackpot
30/12/16 33.16B Dong +11.64B 92439 (total 1st-3rd) prize
28/12/16 21.52B Dong + 9.52B 101484 prize
25/12/16 12.00B Dong +33.13B 187117 prize
JACKPOT 159.23B (2 WINNER)
23/12/16 126.10B DONG +27.72B 160402 Prize
21/12/16 98.38B DONG +24.54B 146392 Prize
2017-05-08 15:52
7/5/17 21.03B DONG +3.58B 34050 PRIZE SUNDAY
5/5/17 17.45B DONG +2.78B 34050 PRIZE FRIDAY
3/5/17 14.67B DONG +2.67B 30582 PRIZE WEDNESDAY
30/4/17 12.00B DONG +7.54B 60401 PRIZE SUNDAY
JACKPOT 37.93B
28/4/17 30.4B DONG +3.26B 64513 PRIZE FRIDAY
2017-05-08 15:56
i believe the total given prize should related to total sales of lottery ticket(according to Law of large number). rectify me if i am wrong (>-<).
2017-05-08 16:09
LOL you are really good. I have never thought of it that way
Thanks a lot
Ricky Kiat i believe the total given prize should related to total sales of lottery ticket(according to Law of large number). rectify me if i am wrong (>-<).
08/05/2017 16:09
2017-05-08 16:54
Hi Icon,
My takeaway, just my two cents.
Pro:
1. Expansion in Vietnam.
Cons:
1. Loosing business to illegal channel.
2. Younger generation opting for other means of betting (Virtual C, apps, etc.)
3. High chance of higher sin tax.
Summary:
Expansion in Viet - declining in Malaysia = Not that very exciting. Might as well invest in Virtual currency.
2017-05-08 17:09
The vietlott was hot the first few months but slow down after that. I have been watching it while drinking coffee here in vietnam.
2017-05-08 17:20
but i also concur that vietlott business is sleeping dragon wait for awaken. Vietnam government & Vincent tan will figure out how to increase the sales after another 8 -10 new game launch in 2017/2018 . \(^o^)/
2017-05-08 17:21
"However, upon closer examination, the group's poor result was mostly due to unusually high tax rate of 43%."
Corp tax 24%; GST 6%; sin tax 13%??
2017-05-08 17:26
thank you very much. Your first hand info is very much appreciated
investabc The vietlott was hot the first few months but slow down after that. I have been watching it while drinking coffee here in vietnam.
08/05/2017 17:20
2017-05-08 17:45
looking for new low shares to buy in a bull market is losing strategy.
you cannot know more than the insiders and the experts. ..I therefore suggest you leave it to icon to lick his wounds here.
no point buying a new low share at this stage of the market.
don't want to buy a new high share, suggest just leave the money alone and hope market crash....which it may soon.
2017-05-08 17:46
I am using this forum to test out my hypothesis
everybody's comments are welcomed
it is good that people like investable and Ricky Kiat can point out my mistakes and wrong assumptions
2017-05-08 17:51
ricky also no inside information.
prizes got this thing called snowballing.....does not indicate level of business.
2017-05-08 17:56
stockmanmy→
no point buying a new low share at this stage of the market.
don't want to buy a new high share, suggest just leave the money alone and hope market crash... which it may soon.
08/05/2017 17:46
........... ..........
pussycats: WOW, stockmany you are more & more like TTB & CP Teh, hoping for market crash. Ish ish ish. Mulut laser tak ada insurans kah? Kikikiki according to ayam taktua
2017-05-08 17:59
this time the catalyst got to be China.
How about this for the catalyst.?
https://klse.i3investor.com/blogs/kianweiaritcles/122418.jsp
2017-05-08 18:03
Bjtoto possible to get online betting license in KL since VT has been fighting for casino license?
2017-05-08 20:41
Pity. If not VT should also bid for Bandar Malaysia together with his brother Danny Tan. They got the money to pay unlike Lim Kang Hoo.
Ryan88 hardly to be succeesful, VT not so good with Najis.
08/05/2017 22:41
2017-05-09 05:30
skyjet, keep quiet. I haven't accumulate enough. Can you delete all these post.
2017-05-09 08:26
con, you are idiot. how much BJTOTO has exposure in Vietnam, Buy lah BJCORP!
GUna logical sense boleh kah. 10% to BJTOTO is nothing impact.
2017-05-09 08:26
Hi Icon8888, can you enlighten us the revenue recognition of Vietlott ? Since BJCorp own 40% of equity interest. The 3 months revenue from July-Oct16,Nov-Jan17 shown in BJCorp QR only RM20mil++ each quarter.
2017-05-09 08:31
BJ Toto declared 19 sen dividend last financial year. I am hoping maybe it can declare at least 16 sen going forward. Coupled with share price of RM3.40, I am hoping I can end 2018 with total value of of RM3.56.
2017-05-09 08:47
sales in increasing all the time...the traditional lottery cant even match with jackpot price...their 4D is doing great as well..BJtoto 10% of vietnam lottery is consider big...Vietnam Lotteries Vietlott worth at least twice the size of BJTOTO
2017-05-09 13:15
every month they are 6-10 jackpot winners.. what does that mean..?? its mean that the sales are quite crazy...http://vietlott.vn/en/trung-thuong/ket-qua-trung-thuong/mega-6-45/winning-numbers/
2017-05-09 13:22
One thing to clarify. I wonder BJTOTO is getting the Vietnam lottery of BJCORP... If I'm Tan Sri I would pump it into BJCORP since I can max out and leverage on debt for overseas expansion.
2017-05-09 17:05
Vietnam may ban lottery game. Let's hope that Vietnam outlaws lottery gaming. It only encourages gambling. Blood Money.
2017-05-09 22:02
I agree @DickyMe sifu vn families struggle so hard to make ends meet and the lotto does not help.
2017-05-11 15:52
Berjaya Corp & Toto are merely operators of Vietlott & Vietnam's MOF is the owner. Until today & after 2 quarters, no one know what is the actual monetary contribution towards Berjaya Corp or Toto.
As far as I look at it, Vincent Tan & everyone who positive about the business have blown a giant hot balloon, only hot air inside.
Read news below:
Berjaya will give 100% of the capital, technical equipment and software. In return, Barjaya will enjoy a certain profit rate of revenues from the lottery business to offset investment costs. However, representatives of the Ministry of Finance did not disclose the specific profit rate.
http://customsnews.vn/cooperation-with-berjaya-does-not-affect-the-ownership-of-vietlott-1817.html
2017-05-16 22:55
However, upon closer examination, the group's poor result was mostly due to unusually high tax rate of 43%.
kikikikiki!!!!!why why tax rate 43%!!!!!writer icon8888 really wannabe expert holland!!!!!
cannot add back taxable amount!!!!where got sor chai do that lay!!!kikikiki!!!!!
TAX IS COMPULSORY!!!!!kikikiki!!!don't want pay then close shop LA!!!!!correct question is why why kena 43% tax rate!!!!!kikikikiki!!!!!
2017-07-05 15:54
Just to recap, in January 2016, Berjaya Corp announced that the Vietnamese government has granted approval for its lottery business in Vietnam.
kikikiki!!!you know profit sharing agreement between bjcorp and vietlott!!!!!!send many gst wannabe expert tt101 hng33 to Pluto!!!price drop after gst bla bla bla!!!!!now new wannabe emerges from deep sea!!!!kikikiki!!!!
remember super infamous bjcorpse mantra!!!!kikikiki!!!!!
2017-07-05 16:00
Thank God, I've very patient. Very much wanted to buy at around 2.80, but keep holding back. I've not bought until now.
2017-07-05 22:43
vn lottery will be the story for bjtoto.
but bjc is the major owner with an effective stake of 40% in BGTI as compared to the 10% of bjtoto.
so the lion share of vn lottery revenue shld be shown on bjc rather than bjtoto.
another question is the profit sharing between the vn govt and bjgroup. what is the structure bearing in mind that vietlott bn govt owned and bjgroup is like a manager of the vietlott.
these r my 2 concerns.
2017-09-24 12:14
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Ricky Kiat
http://vietlott.vn/en/
Bro icon888, base on the recent lottery result from vietlott website , the sales already go down since early 2017(maybe due to local lottery company increase the winner prize).but third game may launch this july.
2017-05-08 12:04