BERJAYA SPORTS TOTO -- BUY

FROM ECM LIBRA
Positive start to Supreme Toto 6/58 GAMING
• 6/58 average revenue per draw at RM800k
Berjaya Sports Toto’s (BST) new lotto game, Supreme Toto 6/58 (6/58) recorded average revenue per draw of approximately RM800k since it was launched three draws ago on 20 Mar 2010 with a maiden jackpot of RM10.9m (Figure 1). This was within expectations as Mega Toto 6/52 (6/52) and Super Toto 6/49 (6/49) recorded similar revenue per draw when their jackpot was approximately RM10m (Figure 2 & Figure 3).
• Average lotto revenue per draw more than 30% higher
Since 6/58 was launched, BST recorded average lotto revenue per draw of RM1.5m (Figure 4). The incremental average lotto revenue per draw was approximately RM500k (6/58 average revenue per draw of RM800k less discontinued 6/49 average revenue per draw of RM300k) or some 30% higher. Lotto revenue per draw will trend higher as the last total jackpot offered was only RM18m when the total minimum jackpot is RM13.9m (Figure 5). This is especially so when the jackpots snowball to levels way higher than the minimum.
• Non-lotto revenue will also benefit
Lotto revenue comprised only 7% and 10% of FY08 and FY09 gross NFO revenue and grew RM132.4m y-o-y but was outpaced by non-lotto revenue which grew RM321.9m y-o-y or two and a half times more (Figure 6). Increased visits to outlets driven by large jackpots also
resulted in higher non-lotto sales. With larger jackpots going forward due to the high 6/58 minimum jackpot of RM8.9m, we foresee non-lotto revenue growth as well. With the competing Magnum 4D Jackpot being struck on Sunday, this will only help BST’s cause (Figure 7).

• Maintain Buy and RM4.91 TP( I will sell by then.)
As only three draws have passed, we leave our earnings estimates unchanged for now. Our RM4.91 TP is premised on end-FY11F DCF utilising 7.9% WACC and 1.5% TGR. We forecast that investors will also receive 27 sen single tier DPS (4QFY10F: 4 sen single tier, FY11F: 23
sen single tier) between now and end-FY11F translating into 17% upside potential. With 681 outlets (Magnum: 485, Da Ma Cai: 343), BST is the single largest NFO operator in Malaysia and is well poised to secure the sports betting license.