BToto's share price ends lower on profit miss, earnings cut

KUALA LUMPUR (June 3): Berjaya Sports Toto Bhd's (BToto) share price closed down five sen or  2.13% at RM2.30 today after analysts said the number forecast operator (NFO) reported third quarter earnings, which were below expectations.

Analysts have also cut their BToto earnings forecast as they take into consideration the impact of the COVID-19 pandemic-driven Movement Control Order (MCO) in Malaysia on BToto’s business.

At Bursa Malaysia, BToto’s share price closed down with 1.5 million units traded. The stock’s price had earlier risen to its intraday high of RM2.40.

BToto’s closing share price of RM2.30 gives the company a market capitalisation of RM3.08 billion.

Yesterday (June 2), BToto said net profit and revenue stood at RM48.61 million and RM1.33 billion respectively in the third quarter ended March 31, 2020 (3QFY20) while 9MFY20 net profit and revenue were at RM177.5 million and RM4.18 billion respectively.

"There are no comparative figures disclosed for the current quarter and period following the company's change of its financial year end from 30 April 2019 to 30 June 2019,” BToto said its Bursa Malaysia filing.

Today, Hong Leong Investment Bank Bhd analyst Andrew Lim Ken-Wern wrote in a note that BToto’s 9MFY20 core profit after tax and minority interest stood at RM168.9 million after excluding the gain on disposal of an investment property.

"We deem the results below expectations despite forming 82% and 74% of our and consensus forecasts respectively, as 4QFY20 earnings will be heavily hit by the ongoing closures.

"We now expect 4QFY20 to register losses given the extended closures. We cut our FY20/21/22 earnings forecast by -39%/-4.8%/-1.6% and maintain HOLD (call for BToto shares) with a lower target price (TP) of RM2.24,” Lim said.
He said Hong Leong’s previous BToto TP was RM2.06.

AllianceDBS Research Sdn Bhd analyst Cheah King Yoong wrote in a note today that the research firm cut its BToto FY20 and FY21 earnings forecast by 29% and 6% respectively.

Post earnings revision and rolling forward AllianceDBS’ BToto valuation base to FY21, AllianceDBS maintained its buy call for BToto with a TP of RM2.95 versus RM2.90 previously, Cheah said.

"Despite the near-term hiccups, we are still positive that its longer-term prospects remain bright as the group will continue to benefit from the clampdown on illegal NFOs.

"Potential/on-going monetary easing by major global Central Banks, including Bank Negara Malaysia, could also promote a yield-seeking investing strategy which favours companies like BToto," Cheah said.

Cheah said BToto’s 9MFY20 core earnings were below expectations. He said BToto's 9MFY20 core earnings at RM171 million accounted for 78% and 73% of AllianceDBS' and consensus full-year forecast respectively.

"We deem the results to be below expectations, as we expect a weak 4QFY20 in view of the extended MCO. We expect BToto to make RM16 million losses in 4QFY20,” he said.