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KUALA LUMPUR (Aug 24): Number forecast operator (NFO) Berjaya Sports Toto Bhd (BToto) expects that NFO outlets may be allowed to reopen once most states, especially those in the Klang Valley where its draw sites are located, transition to Phase 3 of the National Recovery Plan (NRP).
"This is in line with our expectations, though there is some risk to our assumption that the transition to Phase 3 will take place by mid-September. Thus far, Perlis, Labuan and Sarawak have moved to Phase 3," CGS-CIMB Research said in a note to investors. The research firm was sharing some key takeaways from BToto's analyst briefing for its financial results for the fourth quarter ended June 30, 2021 (4QFY21) held yesterday.
NFO outlets were ordered to close temporarily with the implementation of the third movement control order (MCO 3.0) that commenced on June 1.
"On the regulatory front, BToto has been coordinating with the Royal Malaysia Police (PDRM) on raids on illegal NFOs/agents, while the ongoing political instability would likely put on hold potential passing of the Gaming Act amendment (harsher penalties for illegal NFOs/punters) in Parliament, and the Ministry of Finance’s (MoF) approval for mobile gaming," said CGS-CIMB Research.
BToto returned to the black in 4QFY21, posting a net profit of RM30.47 million compared to a net loss of RM43.27 million a year ago. Quarterly revenue jumped 137% to RM1.13 billion from RM475.06 million for 4QFY20 on a higher number of draws in the latest reported quarter.
CGS-CIMB Research noted that BToto did not declare any dividend for 4QFY21 amid uncertainties due to Covid-19 and the economic/political situation.
"Based on [its] 4QFY21 [performance], we think BToto may only resume declaring dividends from 2QFY22 once its NFO outlets fully reopen and it is back in the black," the research house said, predicting that losses are likely in 1QFY22 for BToto.
"Nonetheless, we think our FY22 dividend per share forecast of 11.8 sen is achievable based on a 95% payout ratio," the research firm added. Total dividends BToto declared and paid for FY21 were eight sen per share, amounting to RM107.5 million.
CGS-CIMB Research retained its "add" rating of BToto, with a target price (TP) of RM2.20 and a full NFO earnings recovery from the second half ending June 30, 2022 (2HFY22) as the key rerating catalyst.
At 10.13am today, BToto shares were traded down one sen or 0.5% at RM1.99, bringing the company a market capitalisation of RM2.69 billion.
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