Friday, 1 March 2013

Multi-Purpose - Hurt by high prize payout in 4QFY12 HOLD

- We are keeping our HOLD recommendation on MultiPurpose Holdings Bhd (MPHB) with an unchanged fair value of RM4.00/share.

- Although our fair value suggests a 17.6% upside, we reckon that delays over MPHB’s demerger exercise would put a drag on its share price.

- Recently, the Securities Commission approved MPHB’s appeal subject to the condition that the group updated the valuations of its properties. MPHB’s properties are located in the Klang Valley, Johor and Penang.

- Even without the demerger exercise, we reckon that MPHB would still be able to record decent dividend payouts of more than 50% of net profit every year due to its healthy operating cash flows.

- MPHB’s free cash flows are forecast at 29 sen/share to 37 sen/share for FY13F to FY14F.

- MPHB’s FY12 results were in-line with our expectations and consensus estimates. The group declared a final gross DPS of 5 sen for 4QFY12, which brings total gross DPS to 11 sen for FY12. This implies a yield of 3.2% and a net payout of 45%.

- For FY13F, we have forecast a dividend yield of 4.4%, which suggests a gross DPS of 15 sen and net payout of 59%.

- Pre-tax profit of MPHB’s NFO division fell 30.7% YoY to RM274.2mil in FY12 due to a higher prize payout and lower ticket sales.

- Ticket sales continued to be weak. Revenue edged down 1.2% to RM739.7mil in FY12 after a 3.4% decline in FY11. We believe that MPHB was affected by competition from Berjaya Sports Toto’s jackpot games, which offered higher prizes.

- On a per draw basis, ticket sales declined 4.4% YoY to RM18.7mil in FY12. There were 179 draws in FY12 versus 177 draws in FY11.

- We estimate the prize payout of the NFO division at 68.1% in FY12 against 61.6% in FY11.

- On a quarterly basis, the NFO division recorded a 1.2% decrease in ticket sales in 4QFY12. There were 45 draws in 4QFY12, which was the same as in 3QFY12.

- We estimate that prize payout was at 74.3% in 4QFY12, almost 8.7ppts higher than the payout of 65.6% recorded in 3QFY12.

Source: AmeSecurities

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