The number forecast operator
KUALA LUMPUR: Magnum Bhd
, which saw its net profit falling 24% year-on-year in the first quarter ended March 31, 2016, may see gaming sales grow 2% per annum over the next two years.
Maybank Investment Bank Research said on Wednesday it expected sales growth in 2017 to 2018 after six years of contraction on better consumer sentiment. It upgraded Magnum to Buy from Hold with a target price of RM2.60.
The research house trimmed its FY16 gaming sales/draw growth forecast from +0% on-year to -2% on-year, implying the gaming sales/draw over the remaining quarters would be flat on-year.
That said, it added it was maintaining the company’s dividend per share (DPS) estimates at 16 sen per annum (Q1 16: 4 sen) as they are sustainable at 84%-91% dividend payout (DPR) and committed to stable dividends.
Maybank Research pointed out Jackpot sales were on an upward trend again. While jackpot sales account for only about 15% of total gaming sales, this was a useful indicator of 4D sales (about 85% of gaming sales).
“This is because large jackpots tend to drive punters to visit outlets. Once at the outlets, our observations indicate that punters tend to bet not only on jackpot games (for chances to strike the large jackpots) but also on 4D,’’ it said.
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