Company Background / Updates – Berjaya Sports Toto Berhad (“BToto”) (Current price: RM3.03, as of 13 May 2016)
Berjaya Sports Toto Berhad, through its subsidiaries, primarily operates Toto betting in Malaysia. The company also involves in the lease of online lottery equipment; manufacturing and distribution of computerized lottery and voting systems; and property investment and development activities. In addition, it operates health and fitness centers, as well as offers computer consultancy services. The company was formerly known as Far East Asset Berhad and changed its name to Berjaya Sports Toto Berhad in May 1993. Berjaya Sports Toto Berhad was founded in 1969 and is based in Kuala Lumpur, Malaysia.
Trading range bound with strong support expected at RM2.95 and strong resistance at RM3.40. Some indicators appear to show that BToTo is currently in oversold position. Nevertheless, the crossing of 20D MA below the 50D MA indicates that there could be room for further bearishness.
In terms of fundamental analysis, we impute the required yield by investors based on the 5-year average year end historical dividend yield. The required yield is estimated to be 6.23%.
With BToTo’s stable cashflow profile and dividend policy, we employ the Dividend Discount Model to compute the indicative equity valuation range for BToTo based on assumed annual dividend growth rate which ranges from minus 1.0% to positive 2.0%. The indicative equity valuation range is estimated to be from RM2.67 till RM4.71 per share. At current share price of RM3.03, investors may be expecting BToTo to record future dividend growth rate of between -0.50% and 0.00%.
Analysts’ Forecast Target Price
Average target price of analysts is approximately RM3.35, which represents a potential upside of 10.6% to the current share price of RM3.03.
Based on this desktop analysis, it is observed that BToTo may present short term trading opportunity based on the range bound of between RM2.95 and RM3.40. Further, it is backed by (i) its stable cashflow profile and a dividend yield of close to or more than 6.0%; (ii) higher target price by analysts.
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