Game on for number forecast operators

KUCHING: Shares in number forecast operators (NFOs) listed on Bursa Malaysia yesterday rose after news of the recommencement of their operations.

Berjaya Sports Toto Bhd (BST) rose by two sen in trading yesterday to close at RM2.28 per share with eight million shares traded, while Magnum Bhd (Magnum) rose by six sen to RM2.36 at closing as it saw 8.04 million shares exchanging hands.

All three NFOs – namely BST, Magnum and Pan Malaysia Pools Sdn Bhd – are recommencing their operations with immediate effect. In Sarawak, NFOs have been given the green light from the State Disaster Management Committee (SDMC) for approval to resume operations effective June 19.

Analysts with AllianceDBS Research Sdn Bhd (AllianceDBS Research) estimate an earnings impact of less than five per cent to the NFOs owith regards to the additional loss of draws.

To recap, both BST and Magnum have temporarily suspended their operations during the 83-day enforcement period of MCO effective from March 18 till June 9 in response to the Covid-19 outbreak.

During this period, there was a loss of 36 draws (out of 167 draws in FY20) for each NFO during the enforcement period.

“With the recommencement of the NFO business from June 17, there will be an additional loss of three draws each for BST and Magnum from June 10 to 16 that has yet to be factored into our earnings model,” AllianceDBS Research said in a special report yesterday.

“We estimate that this would lead to a reduction in FY20 earnings of about 2.2 and 2.9 per cents for BST and Magnum respectively. /MAG.”

This led AllianceDBS Research to maintain its buy recommendations for both BST and Magnum, making no change to its target prices for the stocks.

“We maintain buy recommendation for both BST (target price at RM2.95 per share) and Magnum (target price of RM3 per share).

“As dominant players in the NFO sector, we are optimistic that both BST and Magnum will continue to benefit from the authorities’ more stringent enforcement to curb illegal NFO activities, which will continue to drive their earnings growth.

“Furthermore, BST and Magnum offer an attractive dividend yield of more than five per cent for FY21.”

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Lim Li Yin

Lim Li Yin

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