The research house said the gaming counter's lottery ticket sales are at 80% to 85% of pre-movement control order levels versus 45% to 50% recorded in the first few weeks of NFO outlets reopening on June 17.
"We understand that the impact of this second CMCO has been minimal – which reaffirms our view that NFO demand is inelastic," it said.
In 3Q20, jackput ticket sales dropped about 24% year-on-year due to the pandemic post-reopening and lower jackpot prize.
However, there was only one major jackpot win in the quarter as compared to three in the same quarter last year, which could indicate a lower prize payout.
Meanwhile, the clampdown on illegal gambling has benefitted Magnum with sales per draw in FY18-19 having risen 3% to 9% y-o-y after multiple years of decline.
Kenanga kept its earnings estimates and lifted the target price to RM2.66 after rolling forward its discounted cash flow valuation based year to FY22.
"Magnum’s FY21F dividend yield of 7.2% is attractive, and presents an opportunity for long-term yield-seeking investors to accumulate the stock.
"This counter is still our preferred pick in the NFO space, for being a pureplay that is expected to benefit from the on-going efforts to police illegal gambling," it said.
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