The research house had on Tuesday cut its FY19-21F EPS by 19-21% to reflect weaker-than-expected gaming revenue and expected flat revenue and profit from H.R. Owen (HRO) in FY20/21F.
“We had earlier expected a 3-4% number forecast operator (NFO) revenue growth in FY19F due to a clampdown on illegal NFO operators by the government from 2HCY18 onwards but BToto’s NFO revenue has so far been uninspiring,” it said.
CIMB Research is now forecasting just a 1% NFO revenue growth for FY20/21F and a higher 68.0% prize payout ratio (vs. 67.7% previously).
“We also forecast flat revenue and profit for HRO in FY20/21F due to expected weak consumer sentiment ahead of Brexit. Our dividend discount model-based TP drops from RM3.09 to RM2.62 due to a lower DPS outlook,” it said.
It said BToto’s 9MFY19 revenue was down 1.1% on-year at RM4.214bil mainly due to weak gaming revenue, which declined 1.3% on-year to RM2.401bil.
The 9MFY19 domestic NFO revenue fell 0.6% on-year at RM2.315bil while Philippines Gaming Management Corporation’s (PGMC) 9MFY19 revenue was down 17.3% on-year at RM85.7mil.
NFO profit before tax (PBT) declined 2% on-year at RM282mil due to higher prize payout ratio.
“We estimate NFO prize payout ratio in 9MFY19 was 68.0%, compared to 67.7% in 9MFY18,” it said.