Hot Stock BToto rises 1.3% after cancelling STM-Trust listing

Business & Markets 2013
Written by Jeffrey Tan of theedgemalaysia.com
Tuesday, 03 December 2013 12:50
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KUALA LUMPUR (Dec 3): Berjaya Sports Toto Bhd (BToto) rose as much as
1.3% after the number forecast operations entity cancelled its plans to list its
Sports Toto Malaysia Trust (STM-Trust) in Singapore.
At 11.49am , BToto rose four sen or 1% to RM4.04 on trades of 555,800
shares. At 12.30pm, BToto rose as much as five sen to RM4.05.
The stock was the top gainer on the exchange earlier. This follows analysts'
upgrades for the stock on news BToto will not proceed with STM-Trust's listing.
In a note, Kenanga Research said it is positive on this turn of event as the
STM-Trust listing could dilute earnings and valuation for BToto.
This is despite the fact that BToto shareholders stand to receive a one-off 12 to
15 sen special dividend and STM Trust shares under the listing, Kenanga
analyst Teh Kian Yeong said.
Teh said : "We remove the 10% discount to its DCF (discounted cash flow)
valuation to derive new price target of RM4.42/share from RM4.31/share," he
said. Kenanga however maintains its "outperform" call for the stock.
Teh said Kenanga also raised its earnings forecast for BToto. FY14 estimates
were raised by 4.3% as Kenanga had previously expected earnings dilution to
arise from the 13.46% free float of STM Trust'slisting effective Oct this year.
“We also upgrade FY15-FY16 forecast by 12.1% with the full-year impact from
the previous expectation of earnings dilution," Teh said.
Meanwhile, Hong Leong Investment Bank said BToto’s move to cancel the
listing of STM Trust came as a surprise. This is because Hong Leong had earlier expected the trust's listing to materialise by year end.
Hong Leong analyst Grace Chew said the firm has upgraded its target price for BToto to RM4.76 from RM4.67.
Hong Leong has however maintained its "buy" call for BToto shares and kept its earnings forecasts for the firm.