RHB Research maintains buy call on Berjaya Sports Toto on good dividend yields

RHB Research maintains buy call on Berjaya Sports Toto on good dividend yields
Business & Markets 2013
Written by Jonathan Gan at theedgemalaysia.com
Thursday, 26 December 2013 14:13

KUALA LUMPUR (Dec 26): RHB Research has maintained its buy call on BJ Sports Toto Berhad (BST) with a revised target price (TP) of RM4.46 from RM 5.01 previously.

In a note today, the research house reiterated its buy call on the share due to its appealing 6.6-6.9% annual dividend after its target price revision.

Analyst Kong Heng Siong of RHB Research says “The stock is still a buy, as its appealing 6.6-6.9% annual yield makes it the most attractive dividend play under our gaming coverage,” he said.

“Our discounted cash flow-based fair value now stands at RM4.46 following a revision in the earnings forecasts and WACC assumptions,” adds Kong

BST commands an estimated 41% share of number forecast operators (NFO) in the market while its competitor Magnum has a 35% share

The research house believes its niche operation in lotto games continues to put it in a position of strength compared to other NFO’s

The research house comments that its recent move to call off its listing in Singapore may have been a blessing in disguise as it would have significantly diluted BST’s interests.

Despite lower earnings for 1HFY14 due to competition from Pacific Online Systems in the Philippines, the research house expects this to normalise in 2HFY14 on the back of its improving presence.

BST is currently looking to improve its presence by deploying additional lottery terminals in Luzon.

“BST is looking to increase its presence by deploying 700 terminals over the next 3-6 months. This move prompts us to cut our EPS forecasts by 6.7% for FY14F and 7.7% for FY15F to incorporate higher opex, while, at the same time, introduce our FY16F forecasts,” says Kong.