RHB Research is Overweight on Gaming stocks,
NFOs: Higher Number Of Special Draws Now; O/W
Sector Update
Still OVERWEIGHT; Top Pick: Genting (GENT). On 30 May, it was reported that the number of special draw days allowed in 2022 has been increased to 22 days from 11 days. RHB is positive about this development, as it should help lift ticket sales for the number forecast operators (NFOs), and provide a much-needed boost to the sector, which has been adversely affected by COVID-19. While it commands lower margins, the higher number of special draw days is earnings accretive for both NFOs under coverage.
Sports Toto (SPTOTO MK, BUY, TP: MYR2.23)
More Special Draws Now; Stay BUY
Company Update
Keep BUY, new MYR2.23 TP from MYR2.20, 17% upside. On 30 May, ChinaPress reported that the number of special draw days allowed in 2022 has been increased to 22 days from 11 days. RHB is positive on this development, as it is earnings accretive. It will continue to like Sports Toto for the higher growth exposure provided by its other segments, and the upside from the increase in special draw days, supported by a decent 3-6% yield.
Magnum (MAG MK, BUY, TP: MYR2.01) – UPGRADE
A Higher Number Of Special Draws; U/G To BUY
Company Update
Upgrade to BUY from Neutral, new MYR2.01 TP from MYR1.95, 15% upside. On 30 May, ChinaPress reported that the number of special draw days allowed in 2022 has been increased to 22 days from 11 days. RHB is positive about this development, as it is earnings accretive. It sees value emerging after the recent share price correction, as the stock now offers a decent 15% upside, with a boost from the increase in special draw days, and supported by a 5-6% yield.
Ranhill Utilities (RAHH MK, BUY, TP: MYR0.66)
Still Upbeat Despite a Slow Start; Keep BUY
Results Review
BUY, new SOP TP of MYR0.66 from MYR0.76, 35% upside, c.4% yield. 1Q22 core earnings of MYR7.4m (+1% YoY) were below our and Street’s estimates at only 14% and 15% of full-year projections. The negative deviation was mainly on higher-than-expected opex and administrative expenses, which were 28% YoY higher in the quarter. RHB continue to advocate investors accumulate on share price weakness, as Ranhill Utilities is trading below -1.25SD from its 5-year mean EV/EBITDA while its c.32% FY22F earnings growth will be partly underpinned by the services segment.
