KUALA LUMPUR (June 17): AllianceDBS Research has maintained its "buy" recommendations for both Berjaya Sports Toto Bhd (BToto) with a target price (TP) of RM2.95 and Magnum Bhd with a TP of RM3.
In a note today, AllianceDBS Research's Cheah King Yoong said the three numbers forecast operators (NFOs), namely BToto, Magnum and Pan Malaysia Pools Sdn Bhd, resumed their operations today.
To recap, both BToto and Magnum temporarily suspended their operations during the 83-day enforcement period of the movement control order (MCO) from March 18 to June 9 in response to the Covid-19 outbreak.
Cheah said there was a loss of 36 draws, out of 167 draws in financial year 2020 (FY20), for each NFO during the enforcement period, which he had included into the earnings models.
"With the recommencement of the NFO business from June 17, there is an additional loss of three draws each for BToto and Magnum from June 10 to June 16 that has yet to be factored into our earnings models.
"We estimate that this would lead to a reduction in FY20 earnings of 2.2% and 2.9% for BToto and Magnum respectively," Cheah said.
Cheah was optimistic that BToto and Magnum, as dominant players in the NFO sector, will both continue to benefit from the authorities' more stringent enforcement to curb illegal NFO activities, which will continue to drive their earnings growth.
"Furthermore, BToto and Magnum offer an attractive dividend yield of more than 5% for FY21," Cheah said.