Fewer draw days to hurt BToto earnings, says Affin Hwang

KUALA LUMPUR: Berjaya Sports Toto Bhd’s (BToto) earnings will likely take a hit if the government decides to reduce the number of special draws next year, said Affin Hwang Capital.

Details of the cut would only be revealed during the tabling of the 2019 Budget on November 2.

The firm estimates that BToto would net RM17 million in revenue for each draw day this year.

Affin Hwang said the cut-down of draw days was not good for number forecast operators (NFOs).

“The reduction in draw days will have a negative impact on the overall revenue as the increase in revenue per draw day is unlikely to compensate for the loss of a draw day.

“The cut in draw days is also likely to reduce the attractiveness of jackpot-based games as we believe it might take a longer period for jackpot games to accumulate a sizeable prize pool to attract more customers.”

It added that as the industry was already facing fierce competition from illegal operators, the cut in draw days would not do the NFOs any good.

“As the cut in draw days will only start next year, the full impact is likely to be reflected in BToto’s earnings in 2020. The negative impact in the 2019 financial year will be cushioned by an earnings boost during the ‘taxfree’ period from June to this month.

“Based on our estimates, the net profit of BToto is likely to reduce by 0.5 to 1.0 per cent for each draw day withdrawn.”

Affin Hwang has kept its “sell” call and the target price unchanged at RM2.20, pending details from the government on the special draw day cut.

The government’s move is aimed at reducing the social impact of gambling.

The cut in draw days is also likely to reduce the attractiveness of jackpot-based games as we believe it might take a longer period for jackpot games to accumulate a sizeable prize pool to attract more customers. AFFIN HWANG CAPITAL