RHB Research maintains market perform on BToto, FV RM4.85

KUALA LUMPUR (March 22): RHB Research Institute is maintaining its forecast and discounted cashflow-based fair value of RM4.85 for Berjaya Sports Toto (BToto).

It said on Thursday the nine-month net profit ended Jan 31, 2012 was in line with expectations.

BToto declared a third interim single-tier dividend per share of 6.0 sen (3Q11: 6.0 sen), bringing the nine-month DPS to 22 sen versus its FY12 forecast of 25 sen.

“We maintain our dividend payout projections at 80%-85%, which translate to net yields of 5.5% to 6.5% per annum,” it said.

RHB Research said although it agrees with the management’s view that it would be able to grow lotto sales by strong double digits in FY04/12 (9MFY12: up 82.4% on-year),it believed its target of growing 4D sales by single digits was not as achievable.

The research said this was because that up to the nine-month period, 4D sales registered a 1.1% on-year decline, possibly due to cannibalisation from the 4D jackpot game.

“We estimate BToto’s 3Q lotto sales contributed 17.2% of total sales (vs. 15.9% in the 2Q),” it said.

“Given our more upbeat outlook on the economy, we believe BToto’s defensive qualities may no longer appeal to investors who are now looking for higher beta stocks.

“We believe earnings prospects from the 4D jackpot have already largely been reflected in its share price and consensus estimates. Maintain Market Perform,” said RHB Research.



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Stocks to watch: BToto, Lysaght, Bumi Armada, MHC Plantations

KUALA LUMPUR (March 21) : As the FBM KLCI rebounded from the red to close in positive territory on Wednesday, it will be interesting to watch if the index will be able to sustain its gains on Thursday.

The KLCI rose 0.31% or 4.91 points to close at 1,582.53 points on Wednesday.

Analysts said they remain cautious on the trading dynamics of the KLCI following gains from its low last September. This has prompted anticipation of profit-taking by institutional and retail investors ahead of the country’s general election against a lack of domestic catalyst.

The expectation is that the KLCI may consolidate in the near term and the spotlight will now be directed at companies with smaller market capitalisation.

Stocks to watch on Thursday include BERJAYA SPORTS TOTO BHD [] Lysaght Galvanised Steel Bhd, TEXCHEM RESOURCES BHD [], Bumi Armada Bhd, MHC PLANTATION []S BHD [] and DAYA MATERIALS BHD [].

BToto posted net profit of RM112.74 million in the third quarter ended Jan 31, 2012, a slight decline of 1.8% from the RM114.87 million a year ago. Its revenue rose 15.5% to RM983.46 million from RM851.16 million. Earnings per share were 8.44 sen compared with 8.59 sen. It declared a third interim single tier exempt dividend of 6.0 sen per share which will go ex on April 9.

For the nine-month period ended Jan 31, 2012, its earnings rose 27.3% to RM310.52 million from RM243.91 million in the previous corresponding period. Revenue rose at a slower pace of 6.3% to RM2.691 billion from RM2.532 billion.

Lysaght clinched four subcontracts with a collective value of RM22.75 million from Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd, The contracts involve the supply, fabrication, delivery and installation of antenna poles, Lysaght said.

Shares of Lysaght which was untraded on Wednesday, last closed at RM2.08 last Friday (March 16).

Oil and gas support services firm Daya Materials and Italy-based joint venture partner Magneti Marelli which is a part of the Fiat Group, has secured a RM62 million contract from the Penang Development Corp to build a factory and offices at Penang’s Batu Kawan Industrial Park.

Daya Materials rose one sen to 19.5 sen on Wednesday.

Diversified entity Texchem Resources Bhd is selling a controlling 70% stake in two units to Japan-based Fumakilla Ltd for US$42.4 million. The subsidiaries are Technopia Sdn Bhd, a manufacturer of insecticides, and PT Technopia Jakarta, a mosquito coil producer.

Trading of Texchem shares which was suspended on Wednesday will resume trading on Thursday. The stock was last traded at 59 sen on Tuesday (March 20)

Oil and gas support services firm Bumi Armada has secured a RM115 million contract from Brazil national oil company Petróleo Brasileiro S.A. for the supply of a platform supply vessel to the South American entity. Bumi Armada added three sen to RM4.32 on Wednesday.

MHC plans to undertake a bonus issue 56.16 million new shares and a similar number of warrants. Both exercises will undertakenon the basis two bonus units (new shares and warrants) for every five existing shares held.

MHC shares was down one sen to RM1.60.



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BToto 3Q net profit dips 1.8% to RM112.74m, 9-month RM310m

KUALA LUMPUR (March 21): BERJAYA SPORTS TOTO BHD [] posted net profit of RM112.74 million in the third quarter ended Jan 31, 2012, a slight decline of 1.8% from the RM114.87 million a year ago.

It said on Wednesday its revenue rose 15.5% to RM983.46 million from RM851.16 million. Earnings per share were 8.44 sen compared with 8.59 sen. It declared a third interim single tier exempt dividend of 6.0 sen per share which will go ex on April 9.

“The higher percentage increase in revenue was mainly attributed to the higher revenue reported by Sports Toto Malaysia Sdn Bhd. Berjaya Philippines Inc. group reported lower revenue and pre-tax profit for the current quarter under review mainly attributed to higher revenue achieved in the previous year corresponding quarter as a result of the high Jackpot prize then,” it said.

It added that Sports Toto recorded an increase in revenue and pre-tax profit of 17.5% and 13.7% respectively compared to a year ago mainly due to the traditionally high sales during the Chinese Lunar New Year festive season in the current quarter coupled with higher number of draws in the current quarter under review.

For the nine-month period ended Jan 31, 2012, its earnings rose 27.3% to RM310.52 million from RM243.91 million in the previous corresponding period. Revenue rose at a slower pace of 6.3% to RM2.691 billion from RM2.532 billion.

BToto said the group’s improved performance was primarily attributed to the improved results of Sports Toto which recorded an increase in revenue of 6.5%.

Sports Toto recorded an increase in pre-tax profit of 25.4% mainly due to lower prize payout in the current period under review.



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HDBSVR: Malaysian equities may face pressure

KUALA LUMPUR: Hwang DBS Vickers Research said the profit-taking activities on Wall Street overnight may put the Malaysian bourse under pressures with the benchmark FBM KLCI likely to back off from its immediate resistance barrier of 1,580 ahead.

In its market outlook on Wednesday, HDBSVR said in terms of news flows, of probable interest is an insight into Bank Negara Malaysia’s projections on GDP growth rate and inflation, which will be revealed in the central bank’s 2011 annual report due for release this evening.

On the corporate front, there could be share price actions in the following counters: (a) KL Kepong, after disposing of its retailing business of personal care products for RM465 million; (b) Fajarbaru, which has received a letter of award for a CONSTRUCTION [] job worth RM73 million; and (c) TA Enterprise, as its latest financial results came in below par.

Berjaya Sports Toto is scheduled to announce its earnings report card later Wednesday.



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RHB Research downgrades Berjaya Sports Toto to market perform

KUALA LUMPUR (March 5): RHB Research Institute has revised its forecast for Berjaya Sports Toto’s for FY04/12-14 upwards by 0.8%-5.4% to take into account the higher number of draws after including the special draws and the lower sales per draw assumptions.

It said on Monday that despite its revised earnings forecasts, its DCF-based fair value remains relatively unchanged at RM4.85.

“However, given our more upbeat outlook on the economy, we believe BToto’s defensive nature may no longer appeal to investors in the medium term, who are now looking for higher beta stocks,” it said.

RHB Research it also believes earnings prospects from the 4D jackpot have already largely been reflected in its share price and consensus estimates.

“As such, we are downgrading our recommendation on the stock to a Market Perform (from outperform),” it said.



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BLand sells BToto stake for RM80m cash

KUALA LUMPUR: Berjaya Land Bhd (BLand) sold 18.301 million shares or a 1.37% stake in Berjaya Sports Toto Bhd (BToto) yesterday for a total cash consideration of RM79.61 million or RM4.35 per share.

In a statement to Bursa Malaysia, BLand said the net proceeds from the disposal will be utilised as working capital and repayment of bank borrowings of the BLand group.

With the disposal, BLand and its unlisted subsidiaries now hold a total of 533.61 million shares representing a 40% stake in BToto.

BLand’s parent, Berjaya Corp Bhd (BCorp) and its unlisted subsidiaries also hold 132.44 million shares representing a 9.93% stake in BToto. This means that the whole BCorp group still owns about a 49.93% stake in BToto.

Tan Sri Vincent Tan, being the major shareholder of BCorp, also personally holds a 1.13% stake in BToto. Thus, with all the shareholdings combined, Tan still effectively controls over 51% of BToto, the jewel of the BCorp group.


This article appeared in The Edge Financial Daily, February 10, 2012.



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Berjaya Land records RM8.05m loss from sale of BToto shares

KUALA LUMPUR (Feb 9): BERJAYA LAND BHD [] (B-Land) recorded a net loss of about RM8.05 million at group level after it disposed of 18.301 million BERJAYA SPORTS TOTO BHD [] shares for RM79.61 million.

B-Land said the shares were disposed of on Thursday at an average selling price of RM4.35 and the shares represented about 1.37% of BToto.

“The disposed shares which were purchased since 1992, have a total carrying value of about RM87.66 million in the books of B-Land group. The net proceeds from the disposals will be utilised as working capital and repayment of bank borrowings of the B-Land group,” it said.

B-Land said after the disposals of the 18.301 million shares, the company and its unlisted subsidiaries owned 533.607 million BToto shares or 40.00%.

BERJAYA CORPORATION BHD [] and its unlisted subsidiaries also hold 132.439 million BToto shares representing 9.93%.

“With the disposals, the entire BCorp Group (including the B-Land group) has a total of 666.046 million shares representing approximately 49.93% equity interest in BToto. BToto is deemed a subsidiary of B-Land, which in turn is a listed subsidiary of BCorp. BCorp remains the ultimate holding company of BToto,” it said.



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Berjaya Land falls on prop sale news

Berjaya Land Bhd. (BL MK), a property developer, fell 1.6 percent to 92.5 sen. The company denied in a stock-exchange filing a Business Times report that it’s planning to sell overseas hotel properties. Separately, the company said in a statement that it has sold 8.25 million shares in Berjaya Sports Toto Bhd. (BST MK) for 35.2 million ringgit. -- Bloomberg



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Way of the dragon

In the Q&A below, HwangDBS Vickers Research explains the significance and expectations of the Year of the Dragon, which will reign from Jan 23, 2012 through Feb 9, 2013.

Q: Can you briefly explain the Chinese animal signs and basics of Chinese geomancy?
A: According to the Chinese almanac, the lunar calendar runs on a 60-year cycle, rotating among 12 animal signs of the zodiac and five elements that represent the basic components of everything in the universe — fire, earth, metal, water and wood, in this order — with their inter-relationships governed by the cycle of birth and destruction. This year, we are marking the Year of the Water Dragon, which takes over from the Metal Rabbit.

How do you know about celestial predictions when you are supposed to be a financial analyst? Who are your sources?
We do not pretend to know everything, certainly not the art of fortune telling. We trawl through cyberspace and borrow the crystal balls of experts who use a combination of astrology, horoscope and metaphysics principles. Based on consensus opinion, we then link their interpretations to our stock market knowledge, with a dose of logic of course.

Are the astrologers’ forecasts reliable?
Call them what you want — geomancers, soothsayers, astrologers, fortune tellers, feng shui practitioners — these self-styled masters earn a living by making predictions. Just like us, who advise clients by recommending what stocks to buy or sell (and hope we will be rewarded with commissions in return). Since forecasting is more art than science, based on different methods and subjective interpretations, there is no guarantee of accuracy. So, please do not hold us liable for their forward-looking opinions.



But were the predictions accurate last year?
To be honest, it was mixed. We wrote that the stock market rally would extend into 2011, but our local bourse could not sustain its momentum despite registering new highs. Yet, the advice to be more vigilant in the later stages due to possible cooling effects arising from the water element with the arrival of the Year of the Dragon seemed to offer a sense of truth.

In hindsight, investors who emulated the traits of the Rabbit would have benefited. Calls to use the long bunny ears to filter out market noises, avoid overconfidence, and show resilience, were timely. A word of caution — past track record is not a guarantee or reflection of future performance.

Why should we then read this report?
This report is for fun, if you will. The content is merely for amusement to take your mind off the shaky global economic outlook. It is not meant to be a substitute for our fundamental approach. So, be open-minded and stay positive. You can choose to believe or ignore these general forecasts, which are made without considering specific elements. Whatever the omens, remember, you are the master of your own destiny. So, let’s use our common sense to seek the truth.

Which elements will dominate in the Year of the Dragon?
We will see water sitting on top of earth. This represents a destructive cycle as earth is the destroyer of water according to the cycle of birth and destruction. Due to this conflicting relationship, there could be upheavals arising from a sense of imbalance. The combination of the water and earth elements may also result in murky waters, which could obscure the outlook. In addition, the Dragon is the only animal in the Chinese zodiac that is mythical, which implies events may unfold in an illusory manner. Yet, the later part of the year promises stability and recovery.

Will the world end on Dec 21?
As an investor, you should worry more about whether you will make money this year. Contrary to popular belief, the Mayan doomsday prophecy did not predict that the world would end on Dec 21, 2012. It merely said the date marks the end of a great cycle and the beginning of another in their calendar. It is also a leap year, which signifies that we will be able to jump over obstacles ahead. And just to be clear, we plan to be around this time next year to write on the Year of the Snake.

What happened in previous Dragon years?
An analysis of historical stock market performance was inconclusive. In Malaysia, the benchmark KLCI saw an obvious downtrend in 2000, but chalked up gains in 1988. If we go back to the last Year of the Water Dragon in 1952, the DJIA on Wall Street pulled back first (-7%) before rebounding subsequently to close the year up a minute 4%.

When will the bulls return? What does the Year of the Dragon hold for our stock market?
We wish we knew the exact timing. According to the soothsayers, the bulls may not make their presence felt this lunar year. This is because of the missing fire element, which represents the driving force behind the stock market. You may argue that the mythical creature could breathe out fire, but let’s not forget the dominance of the water element in the Year of the Dragon that can calm its fire. Also, because the spirit of the Dragon tends to make everything seem larger than life, the financial markets could see more volatility this year.

To prosper, be adaptable like the Dragon, which can live in water, on land and in the air. Being imaginative and self-driven are essential investment traits, too, as the divine beast is always able to see and chart new paths.


Which sectors will see good fortune?
Industries associated with the wood and earth elements. This is because according to the cycle of birth and destruction, wood conquers earth while earth conquers water (and earth and water are the two dominant elements in the Year of the Dragon). They include consumer products, food and beverage and media (wood element), and property, construction, petroleum related and mining (earth element). Meanwhile, industries that fall under the fire element (airlines, for example) and water element (shipping) are expected to face turbulent times.

Where should investors put their money? And why?
In defensive stocks, of course. For prudence’s sake, that’s why. If the worst is yet to come, then it only makes sense to adopt a capital preservation investment strategy. To seek shelter in Malaysia, consider the following eight names. They are either in auspicious sectors or offer attractive dividend returns: Berjaya Sports Toto Bhd (“buy”, target price: RM4.70), Parkson Holdings Bhd (“buy”, TP: RM6.55), KLCC Property Holdings Bhd (“buy” TP: RM3.70), Axis REIT (“buy”, TP: RM2.75), Gamuda Bhd (“buy”, TP: RM4.80), Petronas Gas Bhd (“buy”, TP: RM16.90), Bumi Armada Bhd (“buy” TP” RM5) and Malayan Banking Bhd (“buy” TP: RM10.60).



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UBS says Malaysia looks pricey but sees FBM KLCI at 1,700

KUALA LUMPUR: Having outperformed most of its regional peers last year, the FBM KLCI is looking unattractive to foreign investors searching for good bargains, said UBS Securities Malaysia Sdn Bhd.

“It has increasingly become more difficult (for foreigners to buy into this market) valuation range right now, trading at a 40% premium to the [Asia ex-Japan] region,” said Chris Oh, UBS’ head of Malaysia research at a media roundtable on the “Malaysia Outlook 2012” here last Friday.

UBS currently has an “underweight” call on Malaysia as well as other Asean countries, given that these markets have been relatively defensive in 2011 and their valuations are no longer attractive. The Malaysian market was the third best-performing Asian market in 2011.

The local market is trading at premium price-earnings (PE) multiples largely due to the perception that Malaysia is a relatively stable market relative to other markets, Oh explained. This stability is due to the dominance of domestic institutional funds like the Employees Provident Fund (EPF) as well as the low foreign ownership levels.

Data from Bursa Malaysia indicated that foreign ownership in Malaysia stood at 22.2% as of September 2011, compared to 27% before the financial crisis of 2008.

In all the past corrections, Malaysia had been able to outperform the MSCI Asia Pacific ex-Japan index every time markets fell, he added.

As such, foreign money may still find its way into the local market, in spite of the multiples already looking rich, should global markets remain volatile and investors become increasingly nervous about developments in Europe and the US, he said. However, more of that money will flow out to markets trading at more attractive earnings multiples should prospects of a recovery become more imminent.

For now, UBS has a year-end target of 1,700 points for the KLCI, on the assumption that risk aversion normalises. The target is based on a forward PE multiple of 14 times, assuming earnings will grow 9% in 2012 and 13% in 2013.

“Malaysia is bracing for a slower external growth environment, but we believe earnings will hold up due to a resilient domestic sector and an on-going economic reform, as a result of the political transformation under Prime Minister Datuk Seri Najib Razak’s leadership,” Oh wrote in a recent note.

The brokerage expects Malaysia’s economy to expand by 3% in 2012 before rebounding to 5.5% in 2013. That’s below its forecast of a 5.9% GDP growth for Asia ex-Japan in 2012 and 6.7% in 2013. Expecting the eurozone to dip into recession, UBS sees global GDP growth for 2012 at only 2.7%, down 50 basis points from 2011, before rebounding to 3.4% in 2013.

Oh’s forecast for the KLCI will fall to 1,300 points should the eurozone crisis be worse than expected, or what he calls a “black-sky scenario”. That’s based on a 12.6 times forward PE and the Malaysian economy contracting 3.3% in 2012.

UBS foresees investors buying higher beta or cyclical names as they position their portfolios for a relief rally when the European situation or market sentiment improves. Investors are also expected to adopt a defensive strategy by going into companies with high earnings visibility, strong cash-flow generation and reasonable dividend yields.

In his presentation last Friday, Oh highlighted five themes for the year and they included the possibility of a pre-election rally, more policy reforms should Najib remain in power, improving Malaysia and Singapore relations as well as a focus on the plantation and the oil and gas sectors.

Pointing out that there was “no clear trend” on a pre-election rally taking place in the past six general elections, UBS reckons the possibility of a pre-election rally taking place here is low due to prevailing weak investor sentiment.

That said, Oh observed that retail investors’ interest in companies with perceived links to the ruling coalition and the current leadership has historically been strong during a pre-election rally. “These companies include SapuraCrest Petroleum Bhd, MMC Corp Bhd, DRB-Hicom Bhd, Malaysian Resources Corp Bhd (MRCB), Johan Holdings Bhd and George Kent (M) Bhd,” Oh wrote in a note dated Dec 1, 2011.

For 2012, UBS top stock picks include Berjaya Sports Toto Bhd, Genting Bhd, Hong Leong Bank Bhd, IJM Corp Bhd and Public Bank Bhd. UBS also likes Axiata Group Bhd and Kuala Lumpur Kepong Bhd, which it has a ‘neutral’ recommendation currently.

These companies are on its preferred list because they are well-managed, with strong fundamentals, earnings growth momentum, clear and strategic direction and provide attractive dividend yields, UBS added.


This article appeared in The Edge Financial Daily, January 9, 2012.



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Resilient bets in sector

Gaming sector
Singapore is expected to surpass Las Vegas as the world’s second largest gaming market with US$7 billion (RM22 billion) gross gambling revenue (GGR) in 2012 (2011E: US$6 billion). Marina Bay Sands (MBS) is leading now, but Resorts World Singapore should catch up as it ramps up slot operations (+33% to 2,470 machines, comparable to MBS), and gradually opens the Western Zone (targeting higher-end VIPs).


Genting Singapore could be an early beneficiary of junkets (if licences are approved) given Genting Group’s long relationship with Asean junkets. Malaysia GGR should remain resilient driven by locals (70% of visitors are day trippers) as Singapore novelty factor recedes.

Genting Malaysia Bhd will have a new growth engine in Resorts World New York (16% of 2012F earnings), but Miami remains a long-shot for now (complicated legislature amendments, competing bids from global casino operators).

Rising credit risk amid heightened economic uncertainties could see higher receivables provision/impairment and deleveraging. Singapore is more vulnerable as the VIP segment constitutes 50% of GGR (purely direct VIPs), while Malaysia’s exposure is only 35% (via junkets).

Singapore Integrated Resorts may also be affected by slower discretionary spending given higher reliance on tourist arrivals (two-thirds of visitors are foreigners).

Sales have proven to be resilient irrespective of economic cycles, being a small-ticket item. We estimate 2012F revenue growth at 5% (1x GDP growth) driven by rising 4D Jackpot sales, which should also lower average prize payout.

Berjaya Sports Toto Bhd’s (BToto) revenue market share will likely inch up to 42% (Multi-Purpose Holdings Bhd: 34%) as its 4D Jackpot game launched in June 11 gains ground (advantage of more outlets, including in Sabah).

Our top picks for Malaysia are Genting Bhd (cheapest gaming stock in the region, multi-prong re-rating from Genting Singapore, Genting Malaysia, Genting Plantations Bhd and disposal of non-core assets) and BToto (resilient cash flows, attractive yields). We also like MPHB (cheaper exposure to numbers forecast operators, capital management opportunities from disposal of non-core assets). — HwangDBS Vickers Research, Jan 5



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Acquisitions seen boosting Genting earnings

Genting Malaysia Bhd's (Genting) recent acquisition spree could potentially take the group's earnings to new heights, especially when the new assets commence operations.

In a research note today, OSK Research Sdn Bhd said the acquisition started with Genting UK, Aqueduct Racino in New York and the casino in Miami, Florida.

"These corporate moves would lift Genting's earnings the same way that Genting Singapore sprang an upside surprise with its maiden earnings," it said.

It said total visitor arrivals to Genting Highlands remained stable.

On the mass market domestic visitation, OSK said domestic day-trippers made up 72 per cent of total visitor arrivals, while Malaysian hotel guests contributed to 64 per cent of room occupancy.

"The mass market casino volume is still up two per cent year-on-year despite a single-digit decline in foreign visitation to the resort and a slight decline in total visitation.

"This is largely attributed to the management's success in driving further improvements in yield management," it said.

On the number forecast operator (NFO) segment, OSK said the introduction of the jackpot element in the 4-digit (4D) games has spurred Berjaya Sports Toto's (BToto) average sales per draw to RM1.5 million to RM2 million.

"However, due to some cannibalisation of its non-4D games, the bet impact from introducing the 4D jackpot games has not been as positive as that experienced by Magnum Corp Bhd via its version of the 4D jackpot, for which sales grew 11 per cent initially versus BToto's less than five per cent," it said.

OSK said in view of the relatively matured NFO market in Malaysia and waning of the novelty effect for 4D jackpot games, the overall NFO gaming growth was expected to moderate to a more sustainable three to four per cent.

"The NFO gaming market tends to reflect greater resilience in times of economic downturn than the casino market given the smaller average size of NFO bets," it said.

It has an "overweight" call on the gaming sector.

OSK has "buy" recommendations on both Genting Bhd and Genting while in the NFO segment, it had a "buy" call BToto as it remained a defensive high-dividend yield play. -- Bernama



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Berjaya Land sells 2.66m BToto shares at RM4.22 each

KUALA LUMPUR (Dec 20): BERJAYA LAND BHD [] disposed of 2.66 million shares of BERJAYA SPORTS TOTO BHD [] (BToto) in the open market on Dec 16 and 19.

BLand said in a statement to Bursa Malaysia on Tuesday the shares were disposed for RM11.22 million or at an average selling price of RM4.22 per share. The shares represented 0.20% of BToto’s issued and paid-up capital of 1.351 billion shares.

“The disposals were at prevailing market prices of BToto Shares at the time of the disposals. The disposed shares which were purchased since 1992, have a total carrying value of about RM12.74 million in the books of BLand group. The net proceeds from the disposals will be utilised as working capital and repayment of bank borrowings of the BLand Group,” it said.

Following the recent disposals, BLand and its unlisted subsidiaries now hold 560.158 million BToto shares representing 41.99% stake.

BERJAYA CORPORATION BHD [] and its unlisted subsidiaries also hold 142.79 million BToto shares or 10.70% stake.

With the disposals, the entire BCorp Group (including BLand group) own 702.948 million BToto shares or 52.69%.

BToto is a subsidiary of B-Land, which in turn is a listed subsidiary of BCorp. BCorp is the ultimate holding company of BToto.



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BToto surprises with another dividend

Berjaya Sports Toto Bhd
(Dec 13, RM4.22)

Maintain buy with target price RM4.85: Net profit for 2QFY12 of RM105.7 million (+62% year-on-year [y-o-y], +15% quarter-on-quarter [q-o-q]) brought 1HFY12 net profit to RM197.8 million (+53% y-o-y), within expectations at 49% of our FY12 estimate.

Revenue of RM1.7 billion (+2% y-o-y) for 1HFY12 was also in line at 48% of our FY12 estimate. Although it surprised with another interim net dividend per share (DPS) of eight sen (16 sen year-to-date), representing a net dividend payout ratio (DPR) of 108% (assumption: 75%), we still hold out for a major capital management exercise. Maintain “buy” with a target price (TP) of RM4.85.

Net profit for 2QFY12 was 62% higher y-o-y and 15% higher q-o-q largely due to an estimated prize payout ratio of 61% which was five percentage points (ppts) lower y-o-y and 2 ppts lower q-o-q. Net profit for 1HFY12 was 53% higher y-o-y largely due to an estimated prize payout ratio of 62% which was 4 ppts lower y-o-y.

Principal subsidiary Sports Toto’s 2QFY12 revenue was 1.8% higher y-o-y. Given that 2QFY12 had one or 2.2% fewer draws y-o-y, Sports Toto’s 2QFY12 revenue/draw was 4% higher y-o-y. Sports Toto’s 2QFY12 revenue was also 2.3% higher y-o-y.

Given that 2QFY12 had also one or 2.2% fewer draws q-o-q, Sports Toto’s 2QFY12 revenue per draw was 4.5% higher q-o-q.

A second interim net DPS of eight sen (+100% y-o-y, +0% q-o-q) brought 1HFY12 net DPS to 16 sen (+33% y-o-y) which represented a net DPR of 108% (assumption: 75%). That said, we still hold out for a major capital management exercise to “assist” its major shareholder, Berjaya Land Bhd, which assumed bridging loans to redeem its RM695.4 million exchangeable bonds on Aug 15.

We maintain our “buy” call and RM4.85 target price (TP). We leave our earnings estimates unchanged. Our TP is discounted cash flow-based and implies 16 times one-year forward price earnings ratio (13-year historical average: 15 times).

We like BToto for its positive earnings reversal from 4D Toto Jackpot, defensive earnings profile, high net dividend yields of 6% and potential for capital management. This stock is one of our top picks for 2012. — Maybank IB Research, Dec 13



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BToto up dividend payment, 2Q net profit rise 62%

KUALA LUMPUR: Berjaya Sports Toto Bhd (BToto), which saw its second quarter net profit jump by 62%, has also bumped up its dividend payment.

The number forecast operator yesterday declared a dividend per share of eight sen for 2QFY12 ended Oct 31. BToto has so far declared dividends of 16 sen per share for FY12 ending April 30, which is more than its earnings per share (EPS) of 14.79 sen.

“This will bring the total dividend distribution for the financial period ended Oct 31, 2011 to about RM213.7 million, representing about 108.1% of the attributable profit of the group for this financial period,” BToto said in its financial results announcement.

BToto’s net profit went up to RM105.67 million or 7.9 sen from RM65.08 million or 4.87 sen last year due to better luck factor despite fewer draws during the quarter. The company had a high prize payout in the previous corresponding period.

EPS stood at 14.79 sen, while net assets per share was 38 sen. The stock shed one sen to close at RM4.11 yesterday.



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BSports Toto climbs on Q2 income surge

Berjaya Sports Toto Bhd, a lottery operator, climbed the most in more than two months in Kuala Lumpur trading after second-quarter net income jumped 62 percent to RM105.7 million.

The stock rose 2.2 percent to RM4.19 at 9:09 a.m. local time, set for its steepest increase since Sept. 27. -- Bloomberg



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BToto up in early trade on firm 2Q earnings

KUALA LUMPUR (Dec 13): BERJAYA SPORTS TOTO BHD [] shares rose on Tuesday after its earnings jumped 62.3% to RM105.67 million in the second quarter ended Oct 31, 2011 from RM65.08 million a year ago when it was affected mainly due to the higher prize payout then.

At 9.10am, BToto gained eight sen to RM4.18 with 69,700 shares traded.

It said on Monday it revenue rose 1.9% to RM862.37 million from RM845.79 million while its earnings per share were 7.90 sen compared with 4.87 sen.

It declared an interim dividend of 8.0 sen per share.



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RHB Research maintains Outperform on BToto, FV RM4.85

KUALA LUMPUR (Dec 13): RHB Research Institute is maintaining an Outperform on Berjaya Sports Toto and has a fair value of RM4.85.

It said on Tuesday that BToto’s stronger second quarter earnings for 2QFY4/12 were due to 4D jackpot and improved luck factor and the net profit was in line with expectations, growing by 62.4% on-year.

“We believe most of the earnings growth was attributed to the 4D jackpot game as well as improved luck factor, which resulted in prize payout ratio falling to 62.8% (from 64.6% in the 1Q).

“Maintain earnings forecasts and DCF-derived fair value of RM4.85. We believe BToto is defensive in an environment of economic uncertainty, with minimal risk to the very decent dividend yields of 6%-7% per annum. Maintain Outperform,” said RHB Research.



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BToto earnings, revenue increase

KUALA LUMPUR: Berjaya Sports Toto Bhd’s (BToto) earnings and revenue increased 62 per cent and 2 per cent respectively in the second quarter ended October 31 due to the improved performance of its primary unit Sports Toto Malaysia Sdn Bhd.

The company said net profit had reached RM105.6 million, while revenue hit RM862 million in the period.

Sports Toto revenue was up 1.8 per cent compared to the same quarter a year ago, despite having a lower number of draws in the current quarter under review.

For the six months ended October 31, BToto’s net profit was up 53.2 per cent to RM197.7 million, while revenue was marginally up by 1.6 per cent to RM1.7 billion.



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Stocks to watch: Proton, DRB-Hicom, BToto, GAB, Sersol

KUALA LUMPUR (Dec 13): The FBM KLCI could trade in a tight range on Tuesday, in line with the weaker sentiment at Wall Street and the European markets that fell on Monday as investors appeared less than convinced about the European leaders’ summit deal to pursue stricter budget rules and a stronger fiscal union.

Initial market enthusiasm over the plan on Friday faded due to legal uncertainty surrounding the pact and the absence of a sufficiently strong financial backstop for the euro zone single currency, according to Reuters.

Ratings agency Standard & Poor's put more pressure on investor sentiment after its chief economist said time was running out for the euro zone to resolve its debt problems and that it might need another financial shock to get it moving.

Fitch Ratings warned that the meeting of EU leaders last week did little to ease pressure on the region's sovereign debt crisis and the rating agency predicted a "significant economic downturn" across the region.

On Monday, Asian indices, including the FBM KLCI pared down their earlier gains.

Against this backdrop, crude palm oil (CPO) futures and crude oil prices also eased.

Palm futures fell to their lowest level in more than a month on Monday, tracking comparative oils lower as investors continued to fret about European debt, but expectations of a heavy rainy season helped cap losses, said Reuters.

CPO futures on the Bursa Malaysia Derivatives Exchange fell RM86 per tonne to RM2,998, the lowest since Nov 8.

On Bursa Malaysia, among the stocks that could be in focus are PROTON HOLDINGS BHD [], DRB-HICOM BHD [], BERJAYA SPORTS TOTO BHD [] (BToto), GUINNESS ANCHOR BHD [] (GAB), and SERSOL TECHNOLOGIES BHD [], as well as PLANTATION []-related stocks.

Proton shares and call warrants rallied on Monday on market talk that Khazanah Nasional would sell its stake to DRB-Hicom.

Tun Dr Mahathir Mohamad, Proton’s adviser, said Khazanah was selling its stake to DRB-Hicom. He was quoted saying on Sunday that Khazanah was selling its stake because it was not pumping more money into Proton, which needed funds for research and development work on new products such as hybrid cars.

BToto’s earnings jumped 62.3% to RM105.67 million in the second quarter ended Oct 31, 2011 from RM65.08 million a year ago when it was affected mainly due to the higher prize payout then.

It said on Monday it revenue rose 1.9% to RM862.37 million from RM845.79 million while its earnings per share were 7.90 sen compared with 4.87 sen. It declared an interim dividend of 8.0 sen per share.

GAB is rewarding it shareholders with a single tier special interim dividend of 60 sen per 50 sen share for the financial year ending June 30, 2012, to be paid on Jan 20 next year.

Meanwhile, Sersol’s shares, which halted trade from 3.56pm on Monday after the company announced it was unaware of the reasons for unusual market activity, will resume trade on Tuesday.

Sersol was earlier queried by Bursa Securities over the sharp rise in price and high volume in the shares recently.

The company in its reply to the regulator, said the directors and major shareholders were not aware of any factors which might have contributed to the unusual market activity.

The company had on Nov 30, announced the embezzlement detected in Zhuhai MS Coating Ltd, after taking into consideration minority interests, was only RM437,000.



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