Business

Wednesday July 15, 2009

BToto’s new game may be a better bet

By LAALITHA HUNT


Analysts see stronger net positive impact on sales growth

PETALING JAYA: Gaming group Berjaya Sports Toto Bhd (BToto) may have a “winning number” in its new lotto game, to be introduced by the end of the year via wholly-owned subsidiary, Sports Toto Malaysia Sdn Bhd, analysts said.

In a filing with Bursa Malaysia recently, the company said it had obtained the approval to replace one of its existing lotto games, the Toto 6/42 Jackpot, with a new lotto game “Power Toto 6/55”.

The group expects to launch Power Toto 6/55 in late 2009 once it has developed a software for the game, with a company official saying it is too early to estimate the new game’s impact on its bottom line.

Maybank Investment Research, in a latest update, noted that the existing Toto 6/42 Jackpot had been recording a revenue per draw of about RM200,000 to RM300,000 with a minimum jackpot win of RM300,000 and maximum of RM3.3mil.

“The more popular Mega Toto 6/52, which has a minimum jackpot of RM2mil, recorded revenue per draw of RM2mil to RM3mil (about 10% of group revenue) when its jackpot snowballed to the maximum RM20mil (currently capped at RM30mil),” the brokerage said, adding that BToto was seeking to repeat that success with the new game.

A genera; view of a Sports Toto betting outlet in Kota Kinabalu, Sabah. The new game has a higher minimum jackpot of RM2mil and no maximum limit, but with a higher matrix, the chance of striking jackpot of one in 29 million.

Power Toto 6/55 has a higher minimum jackpot of RM2mil and no maximum limit, but with a higher matrix, the chance of striking jackpot is one in 29 million.

According to OSK Research, given Power Toto 6/55’s higher matrix, the jackpot could very well surpass the RM20mil level achieved by Mega Toto 6/52 and remain at such elevated levels for a longer period, thus translating into robust and sustainable revenue growth.

OSK Research, however, cautions that sales of Sport Toto’s existing Mega Toto 6/52, with odds of striking jackpot at one in 20 million, may be affected or “cannibalised” with the introduction of the new lotto game.

“But given that both the current Mega Toto 6/52 and new Power Toto 6/55 are relatively high matrix games, we believe the cannibalisation impact would be smaller and hence overall net positive impact on sales growth is expected to be stronger,” it said.

Hwang-DBS, in its latest note, reckons that the earnings impact from the new game may be marginal but notes that the Government has adopted a more accommodative stance towards the gaming sector by approving the replacement of the low-yielding Toto 6/42 with the new game as well as awarding 12 special draws to each numbers forecast operator, above market’s expectations of just 10.

“We see this as the Government’s preferred method of raising income as opposed to a gaming tax hike,” it said.

OSK Research and Maybank Investment are maintaining their “buy” call on the counter with a target price of RM5.60, while Hwang-DBS has a “hold” rating with a target price of RM4.80.


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