Berjaya Sports Toto: Maintain Buy - Steadily Regaining Market Share

By Maybank IB Research
19 June 2012

Earnings in line.  BST’s results were very much within expectations.
However, FY4/12 net DPS of 27sen was 29% or 4sen above our
expectations. Operations wise, it regained market share thanks to 4D
Toto Jackpot. All else being equal, FY4/13 earnings should be higher
YoY due to full year effect of 4D Toto Jackpot (FY4/12: 10½ months).
Maintain BUY call and DCF-based TP of MYR5.00.
Dividends outperformed.  4QFY4/12 net profit of MYR91.2m (-12%
YoY, -19% QoQ) brought FY4/12 net profit to MYR401.7m (+15% YoY),
making up 99% of our full-year estimate. FY4/12 revenue of MYR3.6b
(+5% YoY) was also within expectations at 101% of our estimate.
4QFY4/12 net DPS of 5sen brought FY4/12 net DPS to 27sen (+29%
YoY), 4sen above our expectations. This reflected a net DPR of 90%
(assumption: 75%).
Boosted by 4D Toto Jackpot. FY4/12 net profit was 15% higher YoY
as Sports Toto Malaysia’s (STM) revenue/draw grew 5% YoY, driven by
4D Toto Jackpot.  We estimate that its prize payout ratio eased 1ppt
YoY to 63%. 4QFY4/12 net profit was 19% lower QoQ due to
seasonally slower post-Chinese New Year sales, two less draws QoQ
and an estimated 3ppt QoQ increase in its prize payout ratio, to 65%.
4QFY4/12 stronger than it seems. 4QFY4/12 net profit was 12%
lower YoY; we estimate that prize payout ratio rose 3ppts YoY to 65%.
Encouragingly, 4QFY4/12 revenue was flattish YoY despite Chinese
New Year falling in 3QFY4/12 this year vs. 4Q in FY4/11, and there
being one less draw YoY. This was obviously due to its lotto games led
by 4D Toto Jackpot regaining market share at Magnum’s and Pan
Malaysia Pool’s expense.
Maintain BUY call. We leave our earnings estimates and DCF-based
TP of MYR5.00 unchanged, although we roll forward our valuation from
end-FY4/12 to end-FY4/13. It is obvious that 4D Toto Jackpot has
helped BST regain market share and its earnings recover. A full year
effect will be felt in FY4/13 (FY4/12: 10½ months). Meanwhile,
attractive net dividend yields of 5.7-6% (based on 75% net DPR) will
help limit downside risk.


Share price: MYR4.23
Target price: MYR5.00

[Source]


BJCORP Corporate Chart- BJCORP owns 51.05% of Berjaya Sports Toto Berhad(BJTOTO)