BToto reported higher revenue of RM4.3bn in FY14 due to the
consolidation of H.R. Owen‟s results, but full year net profit fell 17%
YoY to RM323.9m due to weaker performance from Berjaya Philippines,
corporate exercise expenses incurred during the year amounting to
RM34.9m and higher prize payout in FY14. A fourth interim dividend of 7
sen per share was declared, bringing the full year dividend to 26.5 sen
(including third interim share dividend of 9 sen).
Revenue (+10.7% QoQ, +46.0% YoY). Revenue for the quarter jumped 46% YoY to RM1.4bn due to consolidation of HR Owen‟s results in the quarter. Excluding the contribution from HR Owen, FY14 revenue would have fallen 2% YoY on account of weaker contributions from both Sports Toto Malaysia (STM) and Berjaya Philippines (BPI). STM‟s revenue for 4QFY14 decreased 0.8% YoY despite having one extra draw day compared to 4QFY13, indicating lower revenue per draw. Berjaya Philippines (BPI) also continued to record weaker performance as revenue fell 6.5% YoY, mainly due to lower sales reported by the Philippine Charity Sweepstake Office (PCSO) resulting in lower lease rental income for BPI. For the full year, BPI‟s revenue dropped 13.8% compared to FY13.
Net profit (-5.2% QoQ, -8.3% YoY). Net profit for the quarter fell 8% YoY to RM69.4m due to lower profits booked by STM and BPI, which were partially mitigated by profit contribution from HR Owen. STM‟s pre-tax profit plunged 27.7% in 4QFY13 due to higher prize payout and operating expenses, the latter including contributions to charity. BPI‟s pre-tax profit also fell by 10.7% as the impact of weaker sales was exacerbated by increased finance costs after the acquisition of HR Owen. Despite its high revenue of RM786m, HR Owen contributed a mere RM15m in operating profit in FY14, dragging down overall Group margins.
Maintain Neutral with lower TP of RM3.89. We believe the Group will continue to face a challenging operating environment ahead, as rising costs of living crimp on local punters discretionary spending. BPI‟s outlook remains uncertain as its tussle with PCSO is still unresolved. We have tweaked our earnings forecast lower by c.2% to account for higher effective tax rates, and rolling forward our valuations to FY15 with a lower TP of RM3.89 (from RM4.12) based on DDM valuations. We maintain Neutral on BToto in view of BPI‟s dimmer prospects and a lack of catalysts in the local NFO industry.
Source: PublicInvest Research - 18 Jun 2014
Revenue (+10.7% QoQ, +46.0% YoY). Revenue for the quarter jumped 46% YoY to RM1.4bn due to consolidation of HR Owen‟s results in the quarter. Excluding the contribution from HR Owen, FY14 revenue would have fallen 2% YoY on account of weaker contributions from both Sports Toto Malaysia (STM) and Berjaya Philippines (BPI). STM‟s revenue for 4QFY14 decreased 0.8% YoY despite having one extra draw day compared to 4QFY13, indicating lower revenue per draw. Berjaya Philippines (BPI) also continued to record weaker performance as revenue fell 6.5% YoY, mainly due to lower sales reported by the Philippine Charity Sweepstake Office (PCSO) resulting in lower lease rental income for BPI. For the full year, BPI‟s revenue dropped 13.8% compared to FY13.
Net profit (-5.2% QoQ, -8.3% YoY). Net profit for the quarter fell 8% YoY to RM69.4m due to lower profits booked by STM and BPI, which were partially mitigated by profit contribution from HR Owen. STM‟s pre-tax profit plunged 27.7% in 4QFY13 due to higher prize payout and operating expenses, the latter including contributions to charity. BPI‟s pre-tax profit also fell by 10.7% as the impact of weaker sales was exacerbated by increased finance costs after the acquisition of HR Owen. Despite its high revenue of RM786m, HR Owen contributed a mere RM15m in operating profit in FY14, dragging down overall Group margins.
Maintain Neutral with lower TP of RM3.89. We believe the Group will continue to face a challenging operating environment ahead, as rising costs of living crimp on local punters discretionary spending. BPI‟s outlook remains uncertain as its tussle with PCSO is still unresolved. We have tweaked our earnings forecast lower by c.2% to account for higher effective tax rates, and rolling forward our valuations to FY15 with a lower TP of RM3.89 (from RM4.12) based on DDM valuations. We maintain Neutral on BToto in view of BPI‟s dimmer prospects and a lack of catalysts in the local NFO industry.
Source: PublicInvest Research - 18 Jun 2014
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