KUALA LUMPUR: Malaysia's largest legal gaming company, Sports Toto Bhd, which has a slightly above average environment, social and governance (ESG) score, could take it up a notch by focusing on the governance component and also improving its dividend payout ratio.
Sports Toto scored 56/100 for Maybank Investment Bank (IB) Research's proprietary ESG scoring methodology.
Maybank Investment Bank (IB) Research said, that while the company excels in the social component, it can improve the governance side of things by increasing the number of independent and women directors in the company.
Maybank IB Research said Sports Toto has not been distributing dividends according to its dividend policy for three financial years now, due to the COVID-19 pandemic.
It has a policy to pay outt at least 75 per cent of net profit as dividend.
Maybank IB Research said in its note, that less than 50 per cent of Sports Toto's board members are independent directors and less than 30 per cent are women, falling short of the Malaysia Code On Corporate Governance 2021's recommendations.
It only has one female director, who is also the company's chief executive officer.
Sports Toto does not have a large environmental impact but it does have a large social one through its well-known charitable causes.
"Despite having a small environmental footprint, we note positively that Sports Toto has begun reporting Scope 3 emissions in financial year 2023. By comparison, its' main listed competitor, Magnum Bhd did not report Scope 1 and 2 emissions in its FY22 sustainability report."Sports Toto can improve further by establishing greenhouse gas reduction targets," it said in a note.
Sports Toto generates less than 10,000 tonnes of carbon dioxide equivalent (tCO2e) for its financial year ended June 30, 2023 and is neither a major energy nor water consumer.
The firm has a "Hold" call on the stock with an unchanged target price of RM1.40.
