Weak consumer sentiments, illegal NFO continue to weigh on BToto

KUCHING: Analysts remain cautious on Berjaya Sports Toto Bhd (BToto) given its challenging prospects.

AllianceDBS Research Sdn Bhd (AllianceDBS Research) in said in a report: “Other than the weak consumer sentiment, competition from illegal number forecasting operators ( NFO) continues to weigh on the growth prospects of the sector.”

It pointed out that competition from illegal NFOs has intensified since last year with some illegal NFOs willing to increase the prize payout up to 85 per cent.

For the first half of the financial year 2018 (1HFY18), it said BToto’s results were below expectations.

It noted that the group reported a core net profit of RM62 million (down six per cent y-o-y, down 13 per cent q-o-q) in the second quarter of FY18 (2QFY18) mainly due to reduced contributions from HR Owen, which were partially offset by the improved financial performance of its gaming operations.

However, it said, “We believe that q-o-q comparison does not serve as a good gauge for the group given the highly seasonal nature of its gaming business.”

It explained, “HR Owen recorded a decrease in revenue of eight per cent in 2QFY18 compared to 2QFY17, primarily due to the drop in sales from the new and used cars sector during the current quarter as a result of softening demand in the UK car market.

“This operations recorded a pretax loss of RM4 million as compared to pre-tax profit of RM5.1 million reported in the previous year corresponding quarter mainly due to lower revenue, and lower profit margins earned due to poorer product mix.”