Magnum

Magnum

Postby winston » Mon Jun 08, 2015 7:01 am

not vested

Within expectation

1Q core earnings accounted for 36% of our full year estimates
Deemed within expectation in anticipation of weaker quarters ahead
HOLD with RM2.45 TP


Highlights

Within expectation Within expectation

Core net profit of RM90.8m (+10% y-o-y; +48% q-o-q) accounted for 36% of our and consensus full year estimates.

Nonetheless, we deem the results to be within expectation given that:-
(1) this is a seasonally strong quarter. We expect slower ticket sales for the subsequent quarter given the weak consumer sentiment (post implementation of GST);
(2) prize payout ratio is estimated to be 61%, which is below its theoretical payout ratio of 63%; and
(3) Margins will be lower in the upcoming quarters with the full absorption of GST.

The group declared 5 sen DPS, which implies 78% payout ratio. Despite the lower than expected dividend payout, we are retaining our payout assumption of 85% for FY15,
implying 5.5% dividend yield.


Outlook

Earnings prospects unexciting due to weak consumer prospects unexciting due to weak consumer spending spending

Although we have imputed the GST impact onto our earnings model, we remain cautious that the group’s near term earnings prospects could be dragged by weaker
consumer sentiment post-implementation of GST.

Valuation

We maintain our HOLD recommendation for the group with TP of RM2.45, based on the dividend discount model and assuming:-
(i) 85% dividend payout ratio;
(ii) 7.3% cost of equity; and
(iii) 1% terminal growth rate.

Dividend yield of over 5% should continue to support the share price.


Risks

Declining revenue with rising competition and weak Declining revenue with rising competition and weak rising competition and weaker consumer sentiment consumer sentiment

Increased industry competition and weaker consumer sentiment could significantly impact ticket sales.

Source: Alliance DBS
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Re: Magnum

Postby winston » Mon Jun 08, 2015 12:44 pm

vested

Magnum Bhd ( Financial Dashboard)

MAGNUM (Fundamental: 1.7/3, Valuation: 1.4/3) is best-known for its 4-digit numbers forecast games including Magnum 4D and 4D Jackpot and the latest addition, 4D Jackpot Gold that was introduced in November 2014.

In recent years, Magnum has been adversely affected by growing competition among the key players as well as from illegal operators. Rising government taxes encourage consumers to shift their bets to illegal operators, which offer higher prize payout structure.

As a result, its gaming revenue has been in gradual decline — by between 3.2% and 3.5% per annum — from RM3.30 billion in 2010 to RM2.89 billion in 2014.

Looking forward, sales are likely to be dampened further by weaker consumer sentiment, including the expected negative impact from the implementation of GST, whether it is absorbed by the company or passed on to consumers.

For its part, Magnum intends to mitigate the revenue decline with its latest game of 4D Jackpot Gold and to enhance its marketing, products and distribution strategies.

Positively, whilst the operating environment will remain challenging, investors can still count on higher-than-market average yields. Indeed, Magnum has been pushing its payout higher.

Dividends have increased from 6.75 sen per share in 2010 to 18.75 sen in 2013 and 20 sen per share in the latest financial year. At current price of RM2.72, this translates into an attractive net yield of 7.4%.

Cashflow from operations is relatively resilient with minimal expected capex. Balance sheet is healthy with gearing of 18.9%. This should support Magnum’s dividend policy, of at least 80% of gaming profits. The stock is trading at about 1.6 times its book value.

As a comparison, Berjaya Sports Toto ( Financial Dashboard) has a gearing of 27.8% and it paid dividends totalling 17 sen per share for FYApril2014, which translates into a net yield of 5.2% at the current price of RM3.29.

Source: the Edge
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Re: Magnum

Postby winston » Tue Jun 09, 2015 6:05 am

Vested

Revenue -3%
Margin 9%
Gearing 19%
Dividends 0.20
Yield 7.4% @ 2.72

Source: Page 9, The Edge

http://tefd.theedgemarkets.com/2015/FDs ... pq53ez.pdf
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Re: Magnum

Postby winston » Tue Jun 06, 2017 9:07 am

not vested

Worth A Punt

Magnum is now trading at our assessed trough value after suffering the latest bad fortune – IRB’s tax claim.

There are plenty of potential catalysts – operational improvement, resumption of dividend, smaller-than-expected penalty by IRB, or monetisation of U-Mobile.

We also assess that Magnum’s cash flow allows it to offer at least 3.9% dividend yield in 2017, even if it needs to fund the tax claims by IRB via borrowings.

Upgrade to BUY but maintain target price at RM2.00.

Source: UOBKH

https://research.uobkayhian.com/content ... fde7a6ba34
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Re: Magnum

Postby winston » Mon Jun 12, 2017 7:41 am

Is the outlook for Magnum turning brighter?

BY S. PUSPADEVI

UOB Kay Hian Research’s seasoned analyst Vincent Khoo shot out a contrarian view on the stock, calling it a “buy” on the strength of it improving its operations, potentially restoring its dividend payout, monetising a key asset and possibly suffering lower penalties than expected by the Inland Revenue Board (IRB).

Recall that on May 15, the numbers forecast operator (NFO) was served with notices of assessment with a penalty totalling RM476.5mil from the IRB.


CIMB said that it could take years for Magnum to resolve the tax issue, judging from tax disputes of other Malaysian listed companies, while PublicInvest noted that the weak results and tax penalty could cast a large overhang on Magnum’s shares in the interim.


There is also talk about Magnum wanting to cash out from its 6.3% stake in U Mobile, a mobile operator under the Berjaya Group.

U Mobile, according to UOB Kay Hian’s Khoo, has a book value of RM260mil and seems to be on track to gain positive earnings before interest, taxes, depreciation and amortisation this year. There are also rumours about U Mobile’s initial public offering (IPO) in 2018.


Source: The Star

http://www.thestar.com.my/business/busi ... 6IoWXdV.99
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Re: Magnum

Postby winston » Tue Dec 26, 2017 4:24 pm

not vested

Aug 24, 2017

What’s New

1HFY17 results within expectations, Magnum resumes dividend payout

Maintain cautious view due to its cloudy outlook and the potential need to conserve cash

Maintain HOLD with RM1.75 TP

Potential catalysts.
Negative – lower-than-expected ticket sales,unfavourable court decision.

Lower-than-expected ticket sales due to:-

(1) intensified competition from illegal number forecasting operators (NFO) and
(2) weak consumer sentiments could dampen its earnings prospects.

A very unfavourable court decision where Magnum needs to bear the full brunt of RM477m tax liabilities and to settle within a short period of time could put downside risk to our dividend forecasts. This could trigger another round of selling activities.



Source: Alliance DBS
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Re: Magnum

Postby winston » Sun Jan 21, 2018 9:54 pm

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MAGNUM BHD

By M. Shanmugam

The gaming stock fell to a low of RM1.61 in June last year after it was slapped with a tax bill of RM454.4mil from the Inland Revenue Board.

The tax bill is more than what Magnum makes in an average year, which caused concerns on its ability to pay dividends. However the tax matter is something the company and authorities are fighting out in court.

Stripping out the noises from the tax bill, Magnum is well positioned as a defensive stock with steady earnings.

At current prices of less than RM1.85, it still offers a decent yield of more than 7%, much higher than what banks offer.

The number forecasting group has been declaring dividends regularly until the tax issue came up. Should the tax matter be cleared up, as many are expecting, Magnum should go back to its way of declaring dividends every quarter.

Magnum’s topline growth has not been strong but nevertheless steady because there are a large number of people who still frequent number forecasting outlets to place their bets.

For the nine months to Sept 30, 2017, Magnum delivered a net profit of RM156.06mil in net profit on a turnover of RM1.9bil. In 2016, Magnum registered a higher turnover but marginally lower profit.

The gaming industry is another segment that is facing disruption due to technology. Traditional gaming companies such as Magnum face competition from illegal operators and companies that provide online betting services.

Even Magnum’s management concedes that the operating environment is tough. However the stock has been battered down due to the tax issue, which makes it a possible company to look at.

Source: The Star

https://www.thestar.com.my/business/bus ... 85vcWrw.99
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Re: Magnum

Postby winston » Mon Apr 22, 2019 8:59 am

Prime beneficiary of 4D Jackpot revival

Lift TP to MYR2.67 from MYR2.28; upgrade to BUY

Largely reflecting higher 4D Jackpot sales, we raise our FY19 total gross NFO sales/draw growth forecast to 7% YoY (1% YoY previously).

Net impact is to raise our EPS estimates by 8-9% p.a. and DPS estimates by 7-8% p.a..

Coupled with a higher terminal growth rate of 2.0% (1.5% previously), we raise our DCF-TP by 17% to MYR2.67.

With 12% upside potential and >5% p.a. dividend yields, MAG is now a BUY.

Source: Kim Eng

https://factsetpdf.maybank-ke.com/PDF/1 ... ca919e.pdf
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Re: Magnum

Postby winston » Mon Apr 22, 2019 8:59 am

Prime beneficiary of 4D Jackpot revival

Lift TP to MYR2.67 from MYR2.28; upgrade to BUY

Largely reflecting higher 4D Jackpot sales, we raise our FY19 total gross NFO sales/draw growth forecast to 7% YoY (1% YoY previously).

Net impact is to raise our EPS estimates by 8-9% p.a. and DPS estimates by 7-8% p.a..

Coupled with a higher terminal growth rate of 2.0% (1.5% previously), we raise our DCF-TP by 17% to MYR2.67.

With 12% upside potential and >5% p.a. dividend yields, MAG is now a BUY.

Source: Kim Eng

https://factsetpdf.maybank-ke.com/PDF/1 ... ca919e.pdf
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Re: Magnum

Postby winston » Wed Jul 10, 2019 1:46 pm

not vested

Magnum (MAG MK)
Back To Steady Growth Trajectory; Downgrade To HOLD


We remain positive on Magnum’s ability to continue delivering steady growth and to eventually monetise its stake in cellular operator U Mobile (book cost 7% of market cap).

We revise our target price upwards to RM2.79 to factor in the book cost of its U Mobile stake (RM270m; RM0.19/share).

However, we downgrade Magnum to HOLD following the stock’s spectacular 38.2% ytd run-up.

Current valuations aptly reflect a sustainable 3-5% annual revenue growth, and the eventual monetisation of U Mobile can still provide a modest upside.

Entry price: RM2.40.

Source: UOBKH

https://research.uobkayhian.com/content ... 3dd5ceebfc
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