BJToto - UNDERPERFORM - 19 June 2012

Period    4Q12

Actual vs.  Expectations

 FY12 net profit of RM401.7m came in on the dot of our estimate (RM401.2m) as well as that of the market consensus (RM401.7m).

Dividends   A 5 sen net DPS was declared in 4Q12, bringing FY12 net DPS to 27 sen (36 sen GDPS) vs. our projection of 25.5 sen (34 sen GDPS).

Key highlights

 FY12 net profit rose 15% to RM401.7m from RM348.1m on a 5% hike in revenue. This was on the back of a 4% growth in FY12 ticket sales (average ticket sales improved to RM21.9m/draw from RM20.9m/draw) coupled with a better luck factor (estimated prize payout ratio (EPPR) dropped to 59.4% from 60.2%). 

 4Q12 net profit contracted 19% QoQ to RM91.2m while revenue slid 7% QoQ to RM916.1m. This was due to 1) poorer luck factor as EPPR rose to 60.9% from 58.8%, 2) lesser draw days of 44 vs. 46 and 3) the CNY effect in 3Q12. Thus, 4Q12 average ticket sale dropped 4% to RM22.0m from RM22.9m.

 YoY, 4Q12 net income declined 12% despite revenue rising 2% over the year. This was mainly due to the poorer luck factor (60.9% vs. 58.4%). Average ticket sales rose 2% YoY to RM22.0m/draw from RM21.6m/draw a year ago, although the draw days were less at 44 vs. 45. 

Outlook   Forward earnings remain resilient but dividend is set to decline post-listing of STM-Trust.

 

Change to Forecasts

 We have upgraded FY13-FY14 earnings by 3% and 1% respectively as we raised the average ticket sales per draw to RM22.7m and RM23.4m respectively from RM21.8m and RM22.7m previously. Other key assumptions such as EPPR remains at 60% and the number of draws are maintained at 176. However, GDPS are raised to 34 sen and 35 sen from 30 sen and 32 sen.

 We are introducing FY15 estimates where net profit is set to grow at 4% as we expect average ticket sales to grow 3% to RM24.6m/draw, EPPR of 60% and 176 draw days. GDPS is at 36 sen, based on a 90% payout. Note that all our estimates are based on the assumption that Sports Toto Malaysia is 100%-owned by BToto.

Rating  MAINTAIN UNDERPERFORM

Valuation    Price target upped slightly to RM3.88/share from RM3.87/share as we rolled-over our valuation base to FY13 from FY12. This is based on the floor valuation, which includes a 10% holding company discount to its RNAV and a 49 sen special dividend. 

Risks   Risks to our estimates are weaker than expected ticket sales and a higher than expected EPPR

Source: Kenanga