Berjaya Sports Toto 2QFY09: Within expectations
· 1HFY09 results in-line
BST’s 1HFY09 results were in-line with our forecasts, as annualised revenue came in at 51% of our full-year estimates, while annualised net profit was also on track at 52%. BST reiterated its dividend policy of a minimum 75% payout ratio, and expects business to be resilient going
forward. Performance in 2HFY09 is expected to meet our forecast in view of the upcoming New Year and Chinese New Year festivities in January 2009. Besides that, BST is expected to draw in more interest and improve sales with its recent move to raise the maximum jackpot payout for the Mega 6/52 game from RM20m to RM30m effective 7 December 2008.
· Cumulative revenue +14.1% y-o-y, net profit +8.6% y-o-y
Despite having 3 less draws compared to 1HFY08, BST recorded revenue and net profit growth due to higher sales of the 4 Digit game together with 6 months contribution from the Mega 6/52 game compared to 4 months in 1HFY08. As a result, revenue per draw improved by 18.5% y-o-y. The increase in net profit was helped by a lower prize payout and the benefit of Mega 6/52 game’s highest ever jackpot prize of RM20m this quarter.
· 7 sen 2nd interim gross dividend declared
BST declared a 2nd gross dividend of 7 sen/share less 25% income tax for this quarter (2QFY08: 8 sen/share less 26% income tax). Cumulatively, BST has declared gross dividends of 13 sen/share representing about 43% of our full-year dividends estimate.
· Maintain BUY, TP unchanged at RM5.60
We reiterate our BUY call with an unchanged target price of RM5.60 based on DCF valuation, as we believe the stock is on track to meet our FY09 forecast. As a defensive play, dividend yields are attractive at 6.6% with low-risk to earnings growth.