At RM310.5m, BToto’s 9M12 net profit beat the consensus estimates
as it continued to enjoy a relatively
good luck factor in 3Q12. The EPPR of 58.46% in 3Q12 was still below the 60%
theoretical level. The stronger-thanexpected 3Q12 ticket sales, which leapt 13%
QoQ, were mainly led by the CNY effect, higher average ticket sales and more
draw days during the quarter. We have upgraded our FY12 EPS forecast by 3% on a
lower EPPR assumption by 0.5% to 59% but keeping our FY13-FY14 estimates unchanged
for now. Nonetheless, despite the strong 3Q12 and the earnings upgrade, we are
downgrading BToto back to a MARKET
PERFORM rating as
it is now
fairly priced following the good
run in the share price in the past three months. Our TP for the stock remains
at RM4.52/share.
3Q12 above estimates. Berjaya Sports Toto Bhd (BToto) reported yet again
another strong set of results where 3Q12 net profit rose 7% QoQ to RM112.7m,
thanks to the luck factor coupled with solid ticket sales. This brought its YTD 9M12 net profit to
RM310.5m, which accounted for 80% and 78% of ours and the street’s FY12 full year estimates. The main discrepancy
between the actual result and our estimate is due to the 58.85% estimated prize
payout ratio (EPPR) reported in 9M12 vs.
our assumption of 59.5%. However, we
view the strong 3Q12
ticket sales as in line due to the CNY effect and the higher
draw days.
… fuelled by luck
factor again. Although 3Q12 EPPR has
increased to 58.8% from 57.9% in the preceding quarter, it is still below the
theoretical EPPR of 60%. This is the
company’s fifth straight quarter of being blessed with the good luck factor
since 3Q11 as the EPPR is still below or near to the theoretical level. As the
3Q12 EPPR was higher QoQ (vs. 57.9%) and YoY (vs. 56.4%), the 3Q12 operating
margin dipped slightly to 18.0% vs. 18.5% in 2Q12 and 20.3% in 3Q11.
Solid ticket sales on
higher draw days. The CNY effect had
led to higher average ticket sales per draw in the quarter. The higher draw
days of 46 in 3Q12 vs. 43 draws each in both 2Q12 and 3Q11 had also boosted 3Q12
total NFO ticket sales by 13% QoQ and
15% YoY respectively. The 3Q12 average ticket sales per draw of RM22.9m was 6%
QoQ and 7% YoY higher, which we believe was due partly to the 4D Jackpot which
was launched in June last year.
Lower dividend payout
but still decent. BToto declared a 6 sen net DPS (8.0% gross) in 3Q12, down
from 8 sen net in the preceding quarter. This represents a 70.7% earnings
payout, far below the 101.0% payout in 2Q12. YTD, it has declared a total of 22 sen net DPS (29.3 sen gross), implying
a total dividend payout of 94.5%. As such, our assumption of a 30 sen gross in
FY12 is highly likely to be conservative.
FY12E EPS upgraded. In view of the lower-than-expected EPPR
reported in 9M12, we are upgrading our FY12E estimate by 3%. While we have lowered
FY12 EPPR to 59% from 59.5%, we do expect lower ticket sales in 4Q12 as sales
normalise from the CNY effect and a lower draw day of 43 vs. 46 in 3Q12. We
have meanwhile also upgraded our FY12 GDPS to 34 sen from 30 sen previously.
Nonetheless, we are maintaining our FY13-FY14 estimates for now.
But downgraded to
MARKET PERFORM. Despite having strong 3Q12 numbers and having upgraded our
earnings estimates, we are downgrading our call on BToto back to a MARKET
PERFORM from an OUTPERFORM (upgraded on 13 Dec 2011) as it is now fairly priced
following the good run in the share price in the past three months. We maintain
our DCF-derived price target of RM4.52/share and continue to like BToto for its
sustainable and attractive 7%-8% gross dividend yield.
Source: Kenanga
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