Tuesday, June 21, 2016

BJToto: Better Earnings Thanks to Lady Luck & Market Generosity

Results Update

For QE30/4/20165, BJToto's net profit increased by 79% q-o-q or 35% y-o-y to RM105 million while its revenue rose 12% q-o-q  or 2% y-o-y to RM1.48 billion. Its pre-tax profit increased by 77.6% q-o-q due to higher revenue and by lower prize payout by gaming operations and favorable foreign exchange effect enjoyed by H.R. Owen. Thus, the improved financial performance - built on good luck & market generosity - does not inspire a whole lot of confidence.

Table: BJToto's last 8 quarterly results

Chart 1: BJToto's last 47 quarterly results


BJToto (closed at RM2.90 yesterday) is now trading at a fair PE of 12.7 times (based on the last 4 quarters' EPS of 22.76 sen). Its dividend yield is fairly attractive at 6.6% pa.

Technical Outlook

For the past 3 years, BJToto is in long-term downtrend line (RR)- dropping from a high of RM3.80 in May 2013 to a low of RM2.80 in August 2015. It broke above that downtrend line twice in the past 9 months. The first breakout was in October 2015 and the second one was in February this year. The second breakout was more convincing, with MACD crossing above the zero line. In both breakout, the volume was lacking.

Alas, the second breakout may fail like the first breakout. Since early June, BJToto has dropped back below the overcome downtrend line (with support at RM3.00). It is living on borrowed time- staying close to the violated RM3.00 support as well as struggling to form a short-term uptrend line (SS) with its support at RM2.95.

Chart 2: BJToto's weekly chart as at June 20, 2016 (Source: Kenanga/Chartnexus)


Despite a temporary "better" financial result & weaker technical outlook, BJToto is deserved a HOLD rating due to its fair valuation.Like Magnum, BJToto is a good income stock that continues to pay decent dividend even in tough times.

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, BJToto.

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