The research house said that while Berjaya Sports Toto will benefit from the zerorisation of the Goods and Services Tax, the new sales and service tax could still expand to include the number forecast operators.
The company's revenue was cut by 2% under the previous GST regime as the company absorbed the cost instead of passing it on to its customers.
However, Affin Hwang emphasised that the number forecast operators' revenue is impacted by illegal operators.
"The decline in NFOs’ revenue is a structural problem, due to the more attractive payouts from the illegal operators, and we believe the zero-ised GST will not help resolve the problem.
"We believe that operators could have tweaked the payout to pass on the impact of GST, but the widening of the current payout difference (against illegal operators), at around 28%, could cause a significant dip in revenue."
Affin Hwang is keeping the counter's target price unchanged at RM2.20 but downgrading its call to sell from hold due to the recent run-up in the share price.