Business & Markets 2013
Written by Fatin Rasyiqah Mustaza of theedgemalaysia.com
Monday, 21 October 2013 10:08
KUALA LUMPUR: Analysts expect Berjaya Sports Toto Bhd’s (BToto) business trust Sports Toto Malaysia Trust (STM-Trust), enroute to a Singapore listing, to generate attractive yields of up to 8%.
Last Wednesday, BToto received a new conditional eligibility-to-list letter from Singapore Exchange Securities Trading Ltd for the listing of STM-Trust on the Singapore Exchange’s (SGX) main board.
In conjunction with the secondary listing of the trust on Bursa Malaysia’s Main Market, BToto would also undertake a dividend-in-specie of up to 2.81 billion units to shareholders. The dividend-in-specie is on the basis of 21 STM-Trust units for every 10 BToto shares.
Alliance Research analyst Cheah King Yoong said he sees STM-Trust distributing a yield of about 8% for its financial year 2015 forecast (FY15F), based on its minimum offer price of 50 Singapore cents and earnings forecast.
In his report last month, Cheah gave a forecast of a net profit of RM436.2 million for BToto with a revenue of RM3.77 billion for FY15.
“Given the improved terms of STM-Trust listing, we lower our valuation discount from 20% to 10%.
“Our 10% discount is to reflect the combined effect of a 13.5% earnings dilution for BToto from the listing of STM-Trust which is partially offset by the special dividend,” he said.
Meanwhile, HwangDBS Vickers Research said in a report that it estimates a distribution yield of 7.8% for FY15, which is comparable with BToto’s peers of 8% to 10% and higher than Singapore real estate investment trusts’ 6.7%.
REITs, the darling of risk-averse investors, have lost their lustre as investors switch to government debt papers. Analysts said this comes as the yields of government debts rise with the outflow of funds following the US Federal Reserve’s impending move to reduce its asset purchase that has been in place since 2009.
“There could be upside to dividend per unit should STM-Trust gear up in the future (for net cash post-listing),” it said.
It also noted that STM-Trust will be the second largest listed business trust in Singapore with US$2 billion (RM6.32 billion) in market capitalisation.
STM-Trust offers exposure to the largest numbers forecast operator (NFO) in Malaysia with a 42% market share against Magnum’s 34%.
HwangDBS has given BToto a forecast net profit of RM346 million, which is achievable on the back of revenue of RM3.42 billion for FY15.
“We have raised our earnings and sum of parts to factor in STM-Trust’s listing, given clearer visibility.
“We cut FY14 to FY16 forecast earnings by 5.5% to 13.5% to factor in lower share of the Malaysian NFO operations, but raised STM-Trust payout to 100%,” it said.
BToto’s net profit for the first quarter ended July 31 was 10.7% lower at RM98.76 million against RM110.69 million in the previous corresponding quarter. Revenue was also lower at RM887.1 million from RM899.9 million a year earlier.
This article first appeared in The Edge Financial Daily, on October 21, 2013.
Publish date: 21/10/13