Hong Leong Investment Bank Bhd (HLIB) has maintained its HOLD call on Sports Toto Bhd with an unchanged target price of RM1.39, noting that the group’s FY25 results came broadly within expectations. The research house said the numbers forecast operator posted a core net profit of RM252.7 million for the year ended June 2025, up 11% year-on-year, which matched 103% of both its and consensus full-year forecasts.
In the fourth quarter alone, Sports Toto recorded a core profit after tax and minority interest (PATMI) of RM51.6 million, a decline of 54.4% quarter-on-quarter and 30.2% year-on-year. The results were adjusted for exceptional items of RM11.3 million, mainly from an impairment allowance on receivables of RM25.2 million, partly offset by disposal gains from hotels and offices in its associate amounting to RM10 million. The company declared a dividend of 2 sen per share, bringing total dividends for FY25 to 8 sen, higher than the 7 sen paid in FY24.
Revenue in the fourth quarter fell 14.5% from the previous quarter, with the number forecast operations (NFO) segment declining 21.5% due to fewer draws compared to the third quarter, which also benefited from a record-breaking Supreme 6/58 Jackpot prize of RM121.7 million and Chinese New Year festivities. Its UK-based luxury car unit, HR Owen, also saw revenue dip 7.4% as new car sales were weighed down by a demand pull-forward in March.
Year-on-year, overall revenue eased 1.3% as gains in the NFO segment, supported by higher average sales per draw, were offset by a 4.1% decline in HR Owen sales. Core PATMI, however, contracted at a sharper pace of 30.2% due to unfavourable operating leverage. For the full financial year, revenue rose 1.7% to RM252.7 million, supported by stronger NFO sales from the record-breaking jackpot and lower prize payouts.
Looking ahead, HLIB expects Sports Toto’s NFO segment to deliver flattish quarter-on-quarter performance in 1QFY26, noting that sales per draw have not shown meaningful uplift despite the Supreme 6/58 jackpot prize peaking at RM78.5 million before being won last week. HR Owen, meanwhile, is expected to record a slight improvement in the next quarter, supported by the UK’s September number plate registration month.
For FY26, the research house projects normalised 5% revenue growth for the NFO business, while HR Owen is expected to remain flattish, constrained by the continued outflow of high-net-worth individuals from the UK. At the group level, core PATMI is forecast to contract by 12.3% year-on-year to RM221.7 million, reflecting the high base set in FY25 when earnings were buoyed by record jackpots and relatively lower prize payouts.
HLIB said its forecasts remain unchanged, with the valuation based on a target price-to-earnings ratio of 8.5 times, representing 0.5 standard deviation below Sports Toto’s three-year mean, applied to FY26 earnings.
The stock price as of 10.49 am, down by 3.42% with RM1.410.
