Journey to Wealth
Multi-Purpose - Weak ticket sales Hold
- We are downgrading our recommendation on MultiPurpose Holdings Bhd (MPHB) from BUY to HOLD, with a higher fair value of RM4.00/share. We have raised the terminal growth rate in our DCF calculation for MPHB's NFO operations from 2.6% to 4%.
- The proposed demerger exercise of MPHB's non-gaming (property and insurance assets) is scheduled to be completed by 1HFY13.
- Stripping out the non-gaming assets, which would be listed eventually, we estimate the implied value of MPHB's NFO operations at an FY13F PE of 14x.
- This is on par with Berjaya Sports Toto, which is currently trading at FYE4/13F PE of 14x (before listing of the business trust in Singapore).
- MPHB's 1HFY12 core net profit (excluding gains on fair value adjustment and sale of shares in associate) was within our expectations, but below consensus estimates.
- Pre-tax profit of MPHB's NFO, stockbroking and insurance divisions fell 28% YoY to RM194.4mil in 1HFY12 due to increases in NFO prize payouts and net insurance claims.
- Pre-tax profit of the NFO division declined 25.9% YoY to RM167.6mil in 1HFY12. Prize payout rose from an estimated 65.1% in 1HFY11 to 68.1% in 1HFY12. Ticket sales were tepid in 1HFY12 due to weak consumer spending and competition from Berjaya Sports Toto's jackpot games.
- Gross NFO sales shrank 2.9% from RM20.1mil/draw in 1HFY11 to RM19.5mil/draw in 1HFY12. Number of draws amounted to 89 in 1HFY12, which was the same as 1HFY11.
- For FY13F, we have forecast a low ticket sales growth per draw of 2% in FY13F (FY12F: 2%) to account for competition from Pan Malaysian Pools' 6D Jackpot, which was launched in July 2012.
- On a QoQ basis, pre-tax profit of the NFO division was weak in 2QFY12 due to higher prize payouts and a fall in ticket sales/draw. However, pre-tax profit of the insurance division improved from RM2.3mil in 1QFY12 to RM20.6mil in 2QFY12 on the back of a decline in insurance claims.
- Ticket sales per draw shrank 7.6% from RM20.3mil in 1QFY12 to RM18.7mil in 2QFY12 while prize payout climbed from 65.6% to 69.4%.
Source: AmeSecurities
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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....
