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

In a note on Wednesday, March 9, the research house said it expects the company to remain committed to paying a high dividend given the better earnings visibility (after the resumption of activities) and the absence of significant capital expenditure in Malaysia.

It said the lucrative Supreme jackpot amount and a more seasonal Chinese New Year should also bolster sales and a quick recovery in its NFO segment in 2HFY22.

“In addition, robust sales from its luxury car dealership segment will continue to contribute positively to the group,” he said.

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

“We believe the steep discount is unwarranted given that (i) its NFO sales have already recovered to around 85% currently from pre-Covid levels in 2019; and (ii) its luxury car dealership segment has improved significantly,” he said.

Dividend

HLIB expects DPS for FY22/23 of 8.5/11 sen, representing a payout ratio of 67/69%, respectively, which translates into an expected dividend yield for CY22 of 6.7%