RHB upgrades Magnum to Buy, increases TP to RM3.13

  • Analyst Reports
  • Friday, 23 Aug 2019

KUALA LUMPUR: RHB research has upgraded Magnum Bhd to a buy call from neutral with a higher target price of RM3.13 from RM2.36 previously on the back of strong year-on-year sales growth.

The research house lifted its FY10F-21F earnings by 12.9% to 14.3% and dividend per share to 17 sen from 15 sen previously after raising its ticket sales growth and payout assumptions.

In a note, RHB said 1H19 revenue of RM1.4bil and core net profit of RM140mil beat expectations at 60.5% and 57.1% of its and consensus full-year forecasts.

"The better YoY performance was supported by higher average jackpot sizes and significantly lower payout (62.6% vs 65.1% in 1H18)," it said.

Moving forward, RHB expects the strong sales growth to sustain into subsenquent quarter due to highe rjackpot prizxes and better traction in Magnum Life and 4D Jackpot Gold games, which have a significantly lower theoretical payout.

It added that the potential monetisation of Magnum's 6.3% stake in U Mobile could also be a near-term catalyst amid talk of a potential listing of U Mobile by 2020.

"The book value for unquoted securities was MYR357m (MYR0.25/share) as of FY18," it said.

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