However, BJToto is in the process of raising RM800 million via a medium term note programme (MTN). It explained that the proceed would be used to refinance existing bank borrowings and for working capital. BJToto has a net gearing of 0.4 time as per its accounts for QE31/4/2010 (total borrowings of RM450 million less cash & bank balances of RM257 million). Assuming that it refinanced the entire amount of its bank borrowings of RM450 million, the balance of the MTN programme of RM350 million is still available for "working capital". An on-going gaming operator is hardly the kind of business that requires such a large sum of money for working capital. In fact, its existing operation generated cash flow of RM451 million for FY2010 & RM489 million for FY2009. Why is BJToto raising such a large sum of money?
There are two possible reasons for this fund-raising activities:
1. To finance the start-up capital for its 20%-owned associate, Berjaya Lottery Vietnam Ltd; or
2. To effect a large special dividend payout to its shareholders. In FY2010 & FY2009, BJToto paid dividend totaling RM433 million & RM241 million, respectively.
I believe the second scenario is a more likely reason for the MTN programme. This is because its parent company, Berjaya Land Bhd ('BJLand') has a large convertible bond due for redemption in August 2011. The outstanding sum is about RM711 million. BJLand, which owned 51% of BJToto, must be counting on a larger dividend payout from BJToto to ease its cash flow requirement. With the possible available fund of RM350 million from the MTN programme, BJToto could announce a special dividend of 25 sen on top of its normal dividend payout of about 30 sen. If this materialized, BJLand may receive RM379 million dividend from BJToto. Minority shareholders could possibly receive dividend totaling 55 sen for the next financial year.
Technical Outlook
From the chart below, we can see that BJToto is in a long-term uptrend line (SS), with support at RM3.95-4.00. Its medium-term downtrend line (RR) would cap the share at RM4.70-75.
Chart: BJToto's daily chart as at July 2, 2010 (Source: Tradesignum)
Based on good technical outlook & a possible bumper dividend ahead, BJToto could be a good buy for a medium-term investment.
4 comments:
Hi Bro,
Seem shall be OK to buy when bjtoto trade at Rm2.40 :D
perhaps, end of this year can get this "nice" stock. don't u think so?
Hi Ivan,
Buying BJToto at RM2.40 in 2004? Don't we all wish we can do that? The longer one has been in the market, the more one would realize that reward from investment comes from taking risk. Does it mean that one should go out and take more risk? No.
I have a good friend who likes to ask for sure things. I told him time and time again that there is no such thing as sure thing in investment. Even investing in bonds carries risks, such as default risk and interest-rate risk. To put your money in FD also carries risk that inflation would eventually erode the purchasing of the FD saving. We need to constantly look out for ways & means to stay ahead in this game. That's not easy.
hi alex, as for me the bjtoto price around 4.00~4.10, shld be a good price to accumulate in slow mode.i take the 2008 financial crisis to estimate the bottom of bjtoto.during taht time was rm3.5 then quicky to rm4.
Bro,
Any idea on bjtoto now?
Correct me if I am wrong, it seem BJTOTO can support @ 4.10.
MACD, RSI , stoch -showing a uptrend sign. Good to in?
Moreover, highly possible for BJTOTO annouce special dividend in June 2011 (helping BJLAND). Thanks
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