MAGNUM Corp Bhd is expected to announce later this month a 2002 net profit of between RM221.3mil and RM251mil, with some brokers seeing pressure on the results from declining sales in the company's numbers forecasting operations (NFO) as a result of competition from illegal betting and the repatriation of foreign workers last year.
However, Magnum's performance is likely to improve this year, following the government's move to standardise pool betting duty and to raise the prize payout as well as the return of foreign workers, according to analysts.
According to a poll of four brokerages by AFX-ASIA, Magnum is likely to post an average net profit of RM234.2mil in 2002. This is expected to improve to RM269.3mil in 2003.
Multex Global Estimates has a RM227mil net profit consensus for 2002 and RM265.05mil for 2003.
In 2001, Magnum posted net profit of RM245.857mil on the back of RM2.509bil in sales.
“NFO sales were not so interesting in 2002,” said Mohaiyani Securities research head Mohd Amin Abdul Manap, who has the highest projection for Magnum 2002 net profit among analysts polled, at RM251mil.
NFO contributes more than 90% of Magnum's overall earnings, while the rest are from property and leisure, credit and security, IT and investment holding.
A gaming analyst with another brokerage, who declined to be named, said Magnum saw greater competition from illegal betting last year and that was already reflected in its nine months to September earnings.
For the nine months, sales stood at RM1.849bil, while net profit amounted to RM163.188mil.
“The fourth quarter will be similar to the third quarter,” the analyst said.
Analysts said the impact of the repatriation of foreign workers last year was seen in the third and final quarters of 2002, but the first quarter of 2003 would see an improvement in sales with the Lunar New Year festival as well as the return of foreign labour.
The higher prize payout, effective Jan 1 this year, would also help boost Magnum’s sales and bottom line, they added.
Magnum previously paid 12% in duties and this will be reduced following the Finance Ministry's decision to standardise pool betting duty to 6% from Jan 1.
But analysts noted that the lower pool betting duty would be offset by the imposition of a royalty payment of 10% of pre-tax profit and the higher prize payout.
Pankaj Kumar, head of research at OSK Research, said he was expecting Magnum to post a net profit of RM226.6mil in 2002 and RM279mil in 2003. – AFX
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