KUALA LUMPUR (March 9): Hong Leong IB Research (HLIB) has maintained “Buy” on Berjaya Sports Toto Bhd at RM1.79 with an unchanged target price (TP) of RM2.40 and said that the group will recover strongly in 2HFY22.

In a note Wednesday (March 9), the research house said it expects the company to remain committed to a high dividend payout given the better earnings visibility (post business resumption) and absence of big capex spending in Malaysia.

It said the lucrative Supreme jackpot amount and a seasonally stronger Chinese New Year should also bolster for stronger sales and a speedy recovery in its NFO segment in 2HFY22.

“Furthermore, the robust sales in its luxury car dealership segment will continue to contribute positively to the group,” it said.

HLIB said Berjaya Sports Toto’s current share price is languishing and trading at -22.7% discount to the average price in 2019 (pre-Covid price level).

“We believe that the steep discount is unjustified given that (i) its NFO sales has already recovered to c.85% currently compared to pre-Covid level in 2019; and (ii) its luxury car dealership segment has improved significantly,” it said.

Dividend

HLIB is projecting a full year FY22/23 DPS of 8.5/11 sen, representing 67/69% payout ratio, respectively, which translates to projected CY22 dividend yield of 6.7%