Berjaya Sports Toto Bhd (Trading Buy)

• Backed by its resilient gaming business, BJTOTO may appeal as a defensive play for yield-seeking investors amid the current volatile market backdrop.

• Based on consensus DPS estimates of 8.6 sen for FY June 2022 and 15.0 sen for FY June 2023, the stock currently offers dividend yields of 4.8% and 8.3%, respectively.

• This comes as consensus is projecting the group – after announcing net profit of RM35.6m (-73% YoY) in 1HFY22 – to make net profit of RM148.4m in FY22 and RM234.3m in FY23, translating to forward PERs of 16.3x and 10.3x, respectively.

• On the chart, BJTOTO’s share price – closing at RM1.80 yesterday which is even below the March 2020’s trough of RM1.91 during the Covid-19-triggered sell-off – is now hovering near the bottom of a rectangle pattern.

• With both the RSI and stochastic indicators set to climb out from their oversold territories, this may then set the stage for an ensuing technical rebound.

• On the way up, the stock could climb towards our resistance targets of RM1.95 (R1; 8% upside potential) and RM2.07 (R2; 15% upside potential).

• Our stop loss price level is pegged at RM1.68 (representing a downside risk of 7%).

Magnum Bhd (Trading Buy)

• A defensive stock that is backed by its stable gaming business, MAGNUM shares may see downside support from attractive dividend returns.

• The stock currently offers prospective dividend yields of 6.8% in FY December 2022 and 8.2% in FY December 2023 based on consensus DPS forecasts of 12.3 sen and 14.8 sen, respectively.

• Earnings-wise, according to consensus expectations, the group’s net profit is projected to jump from RM0.2m (-99% YoY) in FY21 to RM202.8m in FY22 and RM235.2m in FY23. This implies forward PERs of 12.8x this year and 11.0x next year, respectively.

• Technically speaking, following an ongoing correction to close at RM1.80 yesterday (or nearing its March 2020’s trough of RM1.68 during the Covid-19-triggered sell-off), the share price has now dropped towards the bottom of a rectangle pattern.

• A technical rebound could be on the cards next as both the RSI and stochastic oscillators are in a position to reverse from their oversold areas.

• That said, the stock could rise to test our resistance thresholds of RM1.94 (R1; 8% upside potential) and RM2.04 (R2; 13% upside potential).

• We have placed our stop loss price level at RM1.67 (or a 7% downside risk).

Source: Kenanga Research - 8 Mar 2022