Affin Hwang upgrades BToto to ‘hold’ on Q1 profit

KUALA LUMPUR: Affin Hwang Capital has upgraded Berjaya Sports Toto Bhd to a “hold” from “sell”, while keeping its target price unchanged at RM2.20.

The firm believes that the stock is fairly valued.

Affin Hwang said BToto’s first quarter core net profit of RM68.7 million (down 1.7 per cent yearon-year) was tracking above its expectations, but was still in line with the current industry consensus.

The core profit constituted 28 per cent and 25 per cent of Affin Hwang’s and the consensus’ forecasts, respectively.

“The beat was mainly due to a better-than-expected performance from its United Kingdom operations, whose pre-tax profit more than doubled,” it said in a recent report.

Affin Hwang said the company’s Malaysian operation, however, was still not out of the woods yet.

The operation’s revenue continued on a declining trend, down 2.3 per cent year-on-year in the first quarter but pre-tax profit grew by 2.3 per cent year-on-year because of the lower prize payout.

Overall, Affin Hwang believes BToto’s earnings growth will remain challenging on a lower payout structure relative to the illegal shops and weak results by its unit in the Philippines.

BToto is engaged in investment holding and providing management services to its subsidiary companies.

Through its subsidiaries, the company is engaged in the operation of Toto betting, leasing of online lottery equipment and provision of software support, among others.