neutral !?let me take a look!

Alliance maintains "Neutral" on MPHB; TP: RM3.12

Nadya Ngui

PETALING JAYA: Alliance Research maintains its “Neutral” rating on Multi-Purpose Holdings Bhd (MPHB), given its limited upside post-demerger exercise as well as maintaining its target price at RM3.60, comprising of RM3.12 for its gaming operations and capital repayment of 48.5sen.

The research house said MPHB's earnings were above expectation, supported by improvement in all its divisions mainly from its gaming operations.

“Stripping out exceptional items amounting to RM16.4 million, which consist of gain on disposal of its stockbroking business of RM15.0 million, gain on disposal of investment properties of RM1.4 million -- core earnings for 1Q13 amounted to RM133 million, which achieved 31.9% and 33.9% of our and consensus full-year estimates respectively,” it said.

Alliance said profit from its gaming division surged by 49.8% to RM148.4 million driven by additional one extra draw during the quarter compared to 1Q12, prize payout ratio at 59% vs a normalised ratio of 63% as well as savings in interest expenses from its debt restructuring exercise.

“Operating profit from its financial services division for 1Q13 was 4.8 times higher on-year at RM13.2 million from RM2.3 million reported in the corresponding period last year due to stronger income generated from its general insurance business and disposal gains of investment securities,” it said.

Alliance added MPHB's operating profit from its corporate and other divisions for 1Q13 rose 50.1% on-year to RM25.2 million boosted by gain on disposal of its stockbroking business of RM15.0 million and savings in interest expenses arising from its debt restructuring exercise.

“Nonetheless, we observe that operational environment remains challenging for its gaming operations where gaming revenue per outlet eased by about 1.1% in 1Q13 compared to 1Q12. This reflects the ongoing competition in the numbers forecast operations industry," it said.