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Singapore Investment


 Is it a rewarding time for  RGB 0037 RGB INTERNATIONAL BHD as gaming scene accelerates?

Most investors look at gaming counters such as Genting Bhd and Genting Malaysia Bhd, which are main beneficiaries of the economic recovery.

More so when China decided to reopen its borders fully.

Which other counters will also stand to fare better with improving gaming sector?                

RGB International Bhd is one of them.

It is a casino machine supplier that has been in the gaming industry for over 30 years.

Now that people can cross borders unrestricted, this helps to boost the gaming sector and with traffic, casino operators will want to entice gamblers with exciting and newer gaming machines.

Recognising the exciting growth prospects for RGB, investors have indeed shown much interest in the counter.

RGB has gone from a low of 10 sen to surge to 25 sen before closing at 22 sen on April 20.

The company returned to the black with a net profit of RM4.6 million for the financial year ended Dec 31, 2022 from a net loss of RM10.3 million in the previous year.

Revenue was marginally higher at RM272.5 million versus RM214.9 million.

In addition, the company has a strong balance sheet with net cash of RM76.2 million.

As for free cash flow,  it may generate RM80 million -100 million per year  from 2023 onwards

A reasonable market price is at least 40 sen or RM618 million market capitalisation compared to a share price of 22 sen and market cap of RM340 million currently.

With the free cash flow, this will bode well for RGB looking to expand its technical support and management (TSM) segment.

There is also much cheers when the company declared a 30% dividend payout for FY23 after not paying dividend in the last 3 FYs.

The 30% payout will translate into a potential dividend yield of 2.6% and 2.9% in FY23 and FY24 respectively.

 Rakuten has forecast its FY23 and FY24 net earnings to grow at 898.8% and 8.90% respectively, giving it a BUY recommendation.

The research house has set a target price of 29 sen for RGB premised on PER of 10.4x (5 years average PE) on FY23EPS of 3 sen.

Essentially, with about 37 years operations in the Asean region, RGB enjoys a strong market share, supplying to licensed casino operators in 9 countries.



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