BJTOTO (1562) : Berjaya Sports Toto - Slowing NFO sales
Target RM3.62 (Stock Rating: HOLD)
Annualised 1HFY04/15 net profit of RM178m was slightly below, at 93% of our full-year forecast on slower NFO sales. 2Q interim dividend of 6 sen brought 1H dividends to 11.5 sen, in line with our full year DPS forecast. We lower FY15 EPS by 3.6% as we lower our NFO sales forecast to -4% yoy from -3% yoy. Our DDM-based target price falls marginally as a result. Maintain Hold on BST. The consumer discretionary spending momentum is clearly decelerating in Malaysia and we remain concerned about the strength of the illegal market. BST’s share price will continue to be supported by its solid dividend yield and share buyback programme.
NFO sales decelerating
2QFY15 NFO sales fell 4% yoy (1H15: -6% yoy) as BST signalled that rising cost of living is weighing down on discretionary consumer spending. HR Owen’s 2Q profits were also lower qoq on a weaker RM against GBP and slower used car sales volume. 2Q pre-tax profit improved 19% qoq as on lower net payout ratio (2Q:61.4% vs 64% in 1Q). 3Q results should improve as the Supreme Toto 6/58 Jackpot has snowballed to RM47m, which should improve lotto ticket sales.
Dividend yield intact
2Q’s DPS of 6 sen represents a payout ratio of 81%, while 1H15 DPS of 11.5 sen represents 87% payout on 1H earnings. We believe that our full-year DPS forecast of 24.5 sen is achievable as BST traditionally pays slightly higher DPS in 2H. In addition, BST has re-commenced its share buyback in late Nov, acquiring 3.7m shares at an average price of RM3.45. BST has more than doubled its treasury shares from 3m at end-1Q to 6.6m at end-2Q. Meanwhile, Tan Sri Vincent Tan has also been actively acquiring BST shares in Dec, signalling base line support for the share price.
Outlook remains unexciting
We remain concerned about the strength of the illegal market, which will further benefit from the impending imposition of GST. With GST, the illegal operators will have even more room to raise its payout to increase market share We also expect STM to lose some market share over the longer term in its lotto games to Magnum’s new 4D Jackpot GOLD.
Source: CIMB Daybreak - 22 December 2014
Target RM3.62 (Stock Rating: HOLD)
Annualised 1HFY04/15 net profit of RM178m was slightly below, at 93% of our full-year forecast on slower NFO sales. 2Q interim dividend of 6 sen brought 1H dividends to 11.5 sen, in line with our full year DPS forecast. We lower FY15 EPS by 3.6% as we lower our NFO sales forecast to -4% yoy from -3% yoy. Our DDM-based target price falls marginally as a result. Maintain Hold on BST. The consumer discretionary spending momentum is clearly decelerating in Malaysia and we remain concerned about the strength of the illegal market. BST’s share price will continue to be supported by its solid dividend yield and share buyback programme.
NFO sales decelerating
2QFY15 NFO sales fell 4% yoy (1H15: -6% yoy) as BST signalled that rising cost of living is weighing down on discretionary consumer spending. HR Owen’s 2Q profits were also lower qoq on a weaker RM against GBP and slower used car sales volume. 2Q pre-tax profit improved 19% qoq as on lower net payout ratio (2Q:61.4% vs 64% in 1Q). 3Q results should improve as the Supreme Toto 6/58 Jackpot has snowballed to RM47m, which should improve lotto ticket sales.
Dividend yield intact
2Q’s DPS of 6 sen represents a payout ratio of 81%, while 1H15 DPS of 11.5 sen represents 87% payout on 1H earnings. We believe that our full-year DPS forecast of 24.5 sen is achievable as BST traditionally pays slightly higher DPS in 2H. In addition, BST has re-commenced its share buyback in late Nov, acquiring 3.7m shares at an average price of RM3.45. BST has more than doubled its treasury shares from 3m at end-1Q to 6.6m at end-2Q. Meanwhile, Tan Sri Vincent Tan has also been actively acquiring BST shares in Dec, signalling base line support for the share price.
Outlook remains unexciting
We remain concerned about the strength of the illegal market, which will further benefit from the impending imposition of GST. With GST, the illegal operators will have even more room to raise its payout to increase market share We also expect STM to lose some market share over the longer term in its lotto games to Magnum’s new 4D Jackpot GOLD.
Source: CIMB Daybreak - 22 December 2014
