Thank you RGB for the recovery! Thank you Ah Khoos! I wish everyone huat yeah. I sold all my free tickets for RGB. Going to hoot other recovery counter.
everyone here thinking 0.30 why can't it be 1.00? this is too undervalued. all palm oil companies are replanting it is the same for casino. they are all reinvesting in new machines. This is one of the few companies that will do really well in 2023. put your money here. RM 1.00 is not crazy. Management is smart, conservative and experienced.
RGB International Hoping to ride Philippines's gaming boom - Company Visit Note 14 June 2023 RGB distributes gaming products, such as slot machines and baccarat, to casinos and resorts in the Philippines (73% of FY22 revenue) and Malaysia (27%). It has large exposure to the potential US$10bn GGR market in the Philippines, as it is the distributor for two main slot machines suppliers (Light & Wonder and Aristocrat) in the Philippines. FY22A FCF yield was 14% and it has been net-cash since FY15. 1Q23 net cash of RM101mn is 23% of current market cap. RGB has rallied 50% YTD (vs. KLCI -8%) and trades at 1yr forward P/E of 9.5x and 8.5x on ex-cash basis. • Exclusive distributor in growing addressable market. RGB hopes to benefit from the casinos scheduled to open in the next few years as well as from the privatization of 41 casinos by the Philippines gaming regulator (PAGCOR). Coupled with the introduction of PIGO, which offers remote access live via slot machines for the domestic market, Philippines’s GGR is estimated by GCG Gaming Advisory Services to grow from the current US$3.3bn to US$10bn by 2027. New casinos and integrated resorts have been in talks with RGB to either purchase or lease their machines as RGB is the exclusive distributor for the popular gaming machine Light & Wonder (LNW US) and Aristocrat (ALL AU). These brands dominate 70% of the gaming machines in the Philippines. RGB also provides turnkey technical set-up for new venue, which made up 35% of group revenue. • Strong orderbook pipeline, further cost optimisation and strong FCF generation. RGB has won an order to deliver 2500 additional machines solely to Solaire North in 2023, and is currently in talks with IEC (1009 HK) for its new orders in the Philippines. Further cost optimization is to be implemented, given high admin expenses (60% of gross profit) and effective tax rate of 60% arising from non-deductible expenses. RGB has been a net-cash company since 2015, as it reduced its borrowings and completed its capex cycle. Its FY22A FCF yield was 14%.
Key takeaways from the meeting • Deeper penetration into the fast growing Philippines market from existing clients. RGB supplies gaming machines to all the four large casinos in Entertainment City, which made up 80% of 2022 casino GGR in the Philippines. It has also secured deals (2500 machines) with Solaire North, which is scheduled to open in 2H23. Bloomberry has also revealed its third casino to be in Cavite. Most new casinos are looking to order 2k new machines and RGB hopes to capture the new orders, given its exclusive distribution rights and after-sales service technical support. • Next replacement cycle is near. Slot machines are typically depreciated over 5-8 years and casinos typically change their machines when the older machines start dragging the floor. The last time when Philippines casino operators retired their older machines widely was 6-8 years ago and it is near the next replacement cycle. Moreover, PAGCOR announced that it would improve the technical standards for electronic gaming machines (EGMs). Once finalized and approved, these technical standards would be used for all EGM manufacturers and casino operators prior to importation and deployment of machines on the gaming floor. As borders reopen, and a new cycle of equipment upgrade sees regional casinos incur 2023 capex higher than pre-Covid, RGB hopes this could potentially increase its orderbook. • RGB to benefit from new casino operators in the Philippines. International Entertainment Corporation (1009 HK) received a provisional license for Manila and it is scheduled to open in 2024/25. It has decided to purchase 382 slot machines from RGB to expand their use in its Manila casino. Meanwhile, Suntrust is opening another casino in the Philippines too. RGB’s addressable market has also expanded with the introduction of PIGO, whereby operators could offer remote access gaming via slot machines in their properties, thus further increasing demand for gaming machines. • Strong demand from markets outside the Philippines. RGB is expanding preventive maintenance with major customers, such as Genting Malaysia and possibly in the Philippines. Meanwhile, Thailand and Vietnam could be the next targets, as the countries are pushing to set up new casinos. RGB is also looking to penetrate into Japan and the UAE. • Signed distributorship for Modulus Casino Management system and supply of hardware. RGB is inventing the systems for the Asia market and currently testing the systems across TSM sites in Asia. It is looking to roll out potentially 2000 slot machine systems in 2023 and 2024. This could allow RGB to earn from both the manufacturing services and royalty fees. • Further cost optimisation. RGB’s marketing expenses have historically accounted for c.50% of its gross profit, thus eroding profitability. But 1Q23 saw such expenses fall to 39% of gross profit. RGB stated it will be more stringent on cost controls to drive returns, especially after its recent management changes. • Net-cash since 2015 and strong FCF generation, alongside aggressive debt repayment. RGB has reduced its borrowings and has been a net-cash company since 2015. It paid off debts from FY19 to FY22, the COVID-19 pandemic years. As of 1Q23, RGB had no debt and the RM101mn net cash (23% of market cap) implies 14% FCF yield.
hom3boy - sorry bro. I am holding RGB tickets for a long time. hehe. When Ah Khoo was bashing RGB, I was collecting at 11 to 12 cents. I am very happy RGB doing well. Gambateh bro. See you huat! I switched to another recovery counter and parking inside. Cheers.
I think the dividend is just peanuts.. It depends on how people look at the future growth.. To me is more and more casino is opening and rgb is one of the leader is slot machines...prospect should be good for future.. My view
RM100m operating cash inflow for 2023. If sustainable as seems likely given the explosion of IR, one may use a multiple of 10, and then add back the RM100m cash already in hand, you get RM1.1b. This share can still increase 100% from the current level.
You should check in on some of those fields below.
Title
Category
Comment
Confirmation
Click Confirm to delete this Forum Thread and all the associated comments.
Report Abuse
Please Sign In to report this post as abuse.
Market Buzz
No result.
Featured Posts
MQ Trader
Introducing MY's First IPO Fund for Sophisticated Investors!
MQ Chat
New Update. Discover investment communities that resonate with your ideas
MQ Trader
M & A Value Partners IPO Equity Fund has been launched - Targeted 13% Return p.a
Latest Videos
0:17
New IPO: The onshore and offshore support services provider for the O&G industry, Steel Hawk Bhd aims to list on the Ace Market!
MQ Trader 2909 views | 2 d ago
0:17
New IPO: The largest mini-market player and a leading groceries retailer in Malaysia, 99 Speed Mart Retail Holdings Bhd aims to list on the Main Market!
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....
Tibbers
570 posts
Posted by Tibbers > 2023-06-08 09:42 | Report Abuse
May hit 0.30 in near time, what a big volume coming in since 6 jun.