Saturday, December 12, 2009

BERJAYA SPORTS TOTO

  • FROM ECM LIBRA
    Berjaya Sports Toto
    (RM4.20 BST MK)
    2QFY10: Earnings growth stalls GAMING
  • · Below expectations
    BST’s 6MFY10 results were generally below expectations. Revenue came
    in at 42% and 44% of full-year house and street estimates respectively,
    while net profit stood at 44% and 46% respectively.
  • · 6MFY10 revenue –4.8% y-o-y, net profit -1.5%
    BST’s 6MFY10 revenue declined due to the benefit of strong sales from
    high jackpot in the Mega Toto 6/52 game in 2QFY09. The decline in
    revenue was offset by improved revenue from Prime Gaming Philippines
    Inc.
    Net profit saw a smaller drop than revenue mainly due to lower prize
    payout.
    On a more positive note, there has been sequential improvement in
    revenue and earnings.
  • · No dividends declared
    No dividends were declared by BST for the quarter.
  • · Maintain BUY, TP revised to RM5.30
    We reiterate our BUY call, while our DCF-derived (WACC: 7.5%, g: 2%)
    target price is revised from RM5.80 to RM5.30 as we cut our earnings
    forecast by 7-15%. While BST will benefit in 3QFY10 from the introduction
    of its new game Power Toto 6/55, we are wary of the risks posed by
    Magnum’s 4D Jackpot which has received good response while eroding
    some of BST’s market share. Nonetheless, we expect 2HFY10 to be
    stronger due to Chinese New Year festivities. Risks include (1)
    intensifying competition from alternative jackpot games (2) higher than
    expected prize payout and (3) lower than expected dividend payout ratio.

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