HLIB Research raised its earnings forecasts for Sports Toto by about 2% for financial year 2024 and FY25 to RM237.2mil and RM243.3mil, respectively.
PETALING JAYA: Sports Toto Bhd
’s medium-term prospects appear promising, with the number forecast operator (NFO) expected to see sustained recovery in ticket sales.
This is further supported by the removal of risks and uncertainties associated with the state elections and the tabling of Budget 2024, following the conclusion of both events in recent months.
Hong Leong Investment Bank (HLIB) Research in its report noted that Sports Toto’s ticket sales per draw demonstrated an encouraging growth of 10.5% quarter-on-quarter in the first quarter of its financial year ending June 30, 2024 (1Q24) lifted by the elevated jackpot prizes during the quarter.
“We expect steady performance from the NFO segment with further support coming from the traditionally stronger 3Q24, driven by the Chinese New Year festive season.
“With the conclusion of the state elections and tabling of Budget 2024, significant overhanging risks have now been alleviated for Sports Toto.
“This offers a clearer operating environment,” the brokerage said.
HLIB Research raised its earnings forecasts for Sports Toto by about 2% for financial year 2024 (FY24) and FY25 to RM237.2mil and RM243.3mil, respectively.
It also introduced its FY26 earnings forecast of RM249.9mil for Sports Toto.
Post-earnings revision, HLIB Research raised its target price for the counter to RM1.86 from RM1.79 previously, and reiterated a “buy” call on the counter.
“With the key overhanging risks now removed, we are of the opinion that concerns in the market regarding NFO counters have diminished,” it explained.
Sports Toto’s 1Q24 net profit slipped to RM60.17mil from RM71.5mil in 1Q23.
This was despite revenue growing to RM1.59bil from RM1.42bil.
The earnings, largely in line with expectations, were weighed down by higher prize payouts and growing costs.
