NFOs see quick rebound in jackpot sales


Magnum Bhd and Berjaya Sports Toto Bhd (BToto) sales will recover to around 80% of pre-Covid-19 levels very soon. This, in turn, could see the companies resume paying dividends in the near future.

PETALING JAYA: Numbers forecast operators (NFOs) reopened only about a month ago and are seeing a surprisingly quick recovery in jackpot sales.

Noting this, Maybank Investment Bank (IB) Research said that if history is any guide, it gathers that Magnum Bhd and Berjaya Sports Toto Bhd (BToto) sales will recover to around 80% of pre-Covid-19 levels very soon. This, in turn, could see the companies resume paying dividends in the near future.

The research firm said it understands that most of the 1,700 NFO outlets across Malaysia have reopened.

“Although they account for about 20% of industry sales, jackpot sales can be reliably estimated draw by draw due to their ‘snowballing’ feature. While Classic 4D accounts for about 75% of industry sales, their sales cannot be reliably estimated draw by draw as there is no ‘snowballing’ feature,” it explained.

According to Maybank IB, estimates of jackpot sales post-reopening on Sept 14, 2021 are similar to that of the post-reopening on June 17, 2020, which is post-movement control order (MCO) 1.0.

“Recall that post-MCO 1.0, Magnum and BToto NFO sales (Classic 4D, jackpot and other games) recovered quickly to about 80% of pre-Covid-19 levels.

“Thus, we gather that NFO sales of both the companies will again recover quickly to about 80% of pre-Covid-19 levels in the fourth quarter of 2021 and beyond,” said the research house, which has “buy” calls on both stocks.

That said, it has left its earnings per share (EPS) estimates unchanged in the event new Covid-19 cases climb, which may force NFO outlets to shut again.

“We conservatively leave our EPS estimates unchanged. In any case, any positive earnings revision for this current financial year is unlikely to be repeated next year onwards as we already assume that all NFO outlets will operate on a full-year basis going forward.” it added.

It has a RM2.44 target price for Magnum and RM2.41 for BToto.

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