PETALING JAYA: All eyes are on the gaming sector ahead of the upcoming Budget 2020 with some analysts seeing rising risk of a tax hike for number forecast operators (NFOs).
In a sector report, AllianceDBS Research says the risk is there given the players’ stronger financial footing since late last year, thanks to more stringent enforcement by the authorities in curbing illegal NFO activities.
“Furthermore, considerable time has passed since the authorities last implemented a tax hike for the NFO sector, ” it told clients in the report.
Should the government decide to hike gaming-related taxes in the upcoming budget, the house’s sensitivity analysis shows that a 1% increase in casino duty will lower GENTING BHD and Genting Malaysia Bhd’s forward earnings by about 1% and 3% respectively.
Alliance is nevertheless maintaining its stance that there will be no tax hike for the gaming players in the upcoming Budget.
“Unless there are significant negative surprises arising from the regulatory front in the upcoming Budget, we are maintaining our positive stance on the sector, ” it said, adding that Magnum remained its top pick of the sector.
At the close, Genting and Genting Malaysia finished at RM5.74 and RM3.03 respectively while BToto and Magnum ended RM2.57 and RM2.77.
In the same report, the research outfit said although the Gaming Tax Act 1972 allows the government to impose a higher tax rate beyond the budget period, it believed that the tabling of Budget 2020 had become an event to watch for industry players as the government had unveiled a number of measures that have had a negative impact for the sector in the last budget.