Regional markets slump, KLCI falls more than 25 points
Ringgit set for worst day in six months; Greek woes hit Asia FX
Tradewinds Plantations 1Q net profit tumbles 91.1% to RM4.34m
MISC falls on widening losses, grim outlook
M'sians abroad keen to vote with transparent process and secure mechanism
Squash: Nicol advances into British Open second round
Dr M: Bar Council has become political party
DPM: Over 24,000 teachers to be considered for promotion
Categories
| Analysts remain overweight on gaming sector |
| Business & Market 2009 | |||
| Written by Financial Daily | |||
| Friday, 25 September 2009 11:21 | |||
|
“On the whole, we are positive on this development for the industry, as we believe the new game may actually serve to reduce the illegal market (estimated to be RM10 billion in size) and enlarge the NFO (number forecast operator) revenue pie, which will be beneficial to not only Magnum, but to all NFOs,” RHB Research said in a note yesterday. The research house believed this game would make Magnum’s overall prize payout ratios (PPR) more stable and enable it to attract punters from the illegal market as well as younger punters. However, it said the game may not be as succesful at winning market share from Berjaya Sports Toto Bhd’s (BToto) lotto punters, as the minimum bet of RM2 is double that of BToto’s lotto games, while the more complicated features of the game may result in the game needing some time to take off. RHB Research noted that there were concerns there would be an impact to BToto’s market share or lotto revenue, since Magnum’s new game is launched earlier than BToto’s soon-to-be-revamped 6/55 game and has a larger strike chance than BToto’s lotto games.  “We estimate that every 1% drop in lotto revenue for BToto would result in a 1.5% to 2% drop in profits, given the higher margins of the lotto games. “Nevertheless, we note that the risk of BToto losing its dominant market share is minimal, in our view, as it would still have at least four more games than Magnum, while market share is currently approximately 5% to 6% points above Magnum,” it said. The research house has kept its market perform call on BToto unchanged with a discounted cash flow-based (DCF) fair value of RM4.80, as well as its outperform recommendation for Genting Bhd and Genting Malaysia Bhd. Meanwhile, Maybank Investment Bank (Maybank IB) reaffirmed its buy call on BToto with a target price of RM5.60. “BToto’s replacement of its 6/42 game with the higher top prize 6/55 game by year-end will help moderate the Magnum 4D Jackpot’s effect on its earnings. The award of 12 special draws, game variations and new games also sends a signal that the government is taking a more liberal stance towards NFOs. “Thus, gaming tax and betting duty hikes may not materialise during the upcoming Federal Budget in October,” Maybank IB said. It estimated that BToto recorded some RM900 million to RM1 billion of jackpot revenue in FY09. Magnum’s new 4D Jackpot may not compete against the BToto’s lotto games because punters were choosing from a different number set when betting on the Magnum 4D Jackpot versus the 6/49 or 6/52 at BToto, it added. It also has a buy call on Tanjong plc, which it said was the main loser among the NFOs as it does not have a jackpot game. BToto added one sen to RM4.46 at yesterday’s close while Tanjong and Magnum’s parent company, Multi-Purpose Holdings Bhd shed six sen and two sen respectively to RM15.08 and RM1.88. This article appeared in The Edge Financial Daily, September 25, 2009.
|
|||
|
|