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Brokerages downgrade Magnum after shares run-up
by Cals Sat 27 Jul 2013, 11:32
Published: Saturday July 27, 2013 MYT 12:00:00 AM
Updated: Saturday July 27, 2013 MYT 7:15:40 AM
Brokerages downgrade Magnum after shares run-up
PETALING JAYA: Numbers forecast operator Magnum Bhd has been downgraded by several research houses following the run-up of its share price.
RHB Research analyst Kong Heng Siong downgraded the stock to “neutral” from “buy”.
He said in a report that the company’s share price, after the recent run-up, was trading at 21 times financial year ending Dec 31, 2014 price-to-earnings ratio on par with other numbers forecast operators in the country, implying a yield of 3.8% per annum.
However, he is maintaining a target price of RM3.89 for the shares since the company’s insurance and property arms have been spun off to MPHB Capital Bhd.
Magnum shares closed 6 sen lower at RM3.87 with 1.91 million traded.
Kong said the revamped earnings model solely captured the gaming business and targetted the company’s net profit to be between RM258.6mil and RM281.7mil from financial years 2013 to 2015, with dividend per share of between 14.4 sen and 15.7 sen and a dividend payout ratio of 80%.
He said another reason for the downgrade was because the shares had gained 11.2% after they went ex on May 27 upon MPHB’s listing.
Meanwhile, Maybank Investment Bank Bhd analyst Yin Shao Yang, who downgraded the stock to “hold” from “buy”, said the upside had narrowed.
Suggesting that investors should consider MPHB as the stock would yield 38% upside from current levels on a sum-of-parts-based target price of RM1.99. MPHB Capital shares closed unchanged at RM1.54 on volume of 3.7 million shares.
Kong noted that Magnum’s second-quarter revenue should come in around RM670mil to RM720mil and expects core earnings to be around the RM60mil to RM70mil range, assuming normalised payout ratio of 68%.
“This would translate to a drop in earnings of between 40% and 50% quarter-on-quarter owing to a higher number of draws and lower-than-average price payout ratio in the first quarter,” he said.
However, Kong expects improvements on a yearly basis owing to an above-average price payout ratio in the second quarter.
Updated: Saturday July 27, 2013 MYT 7:15:40 AM
Brokerages downgrade Magnum after shares run-up
PETALING JAYA: Numbers forecast operator Magnum Bhd has been downgraded by several research houses following the run-up of its share price.
RHB Research analyst Kong Heng Siong downgraded the stock to “neutral” from “buy”.
He said in a report that the company’s share price, after the recent run-up, was trading at 21 times financial year ending Dec 31, 2014 price-to-earnings ratio on par with other numbers forecast operators in the country, implying a yield of 3.8% per annum.
However, he is maintaining a target price of RM3.89 for the shares since the company’s insurance and property arms have been spun off to MPHB Capital Bhd.
Magnum shares closed 6 sen lower at RM3.87 with 1.91 million traded.
Kong said the revamped earnings model solely captured the gaming business and targetted the company’s net profit to be between RM258.6mil and RM281.7mil from financial years 2013 to 2015, with dividend per share of between 14.4 sen and 15.7 sen and a dividend payout ratio of 80%.
He said another reason for the downgrade was because the shares had gained 11.2% after they went ex on May 27 upon MPHB’s listing.
Meanwhile, Maybank Investment Bank Bhd analyst Yin Shao Yang, who downgraded the stock to “hold” from “buy”, said the upside had narrowed.
Suggesting that investors should consider MPHB as the stock would yield 38% upside from current levels on a sum-of-parts-based target price of RM1.99. MPHB Capital shares closed unchanged at RM1.54 on volume of 3.7 million shares.
Kong noted that Magnum’s second-quarter revenue should come in around RM670mil to RM720mil and expects core earnings to be around the RM60mil to RM70mil range, assuming normalised payout ratio of 68%.
“This would translate to a drop in earnings of between 40% and 50% quarter-on-quarter owing to a higher number of draws and lower-than-average price payout ratio in the first quarter,” he said.
However, Kong expects improvements on a yearly basis owing to an above-average price payout ratio in the second quarter.
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