KUALA LUMPUR: Hong Leong Investment Bank (HLIB) research has raised its target price (TP) for Sports Toto Bhd post its first quarter financial year (FY) 2024 (1QFY2024) results announcement.
"Forecast for FY24- 25 is raised by 2-3 per cent after incorporating annual report updates. We also introduce our (core net profit) FY26 forecast of RM249.9 million. Post earnings revision, our TP is raised to RM1.86 (from RM1.79 previously)."
"With the key overhanging risks now removed, we are of the opinion that concerns in the market regarding number forecast operator (NFO) counters have diminished," HLIB research said in its note today.
As at 11.27am, Sports Toto was trading at RM1.50 a share.
It maintains a BUY on Sports Toto.
Sports Toto reported a core net profit of RM60.2 million for 1QFY24 (-9.8 per cent quarter-on-quarter, -18.9 per cent year-on-year).
The performance came in within both its own and street estimates at 28 per cent of full year forecast.
Sports Toto's ticket sales per draw demonstrated an encouraging growth of 10.5 per cent quarter-on-quarter in 1QFY24 lifted by the elevated jackpot prizes during the quarter.
"We expect steady performance from the NFO segment with further support coming from the traditionally stronger 3QFY24, driven by the Chinese New Year festive season."
"With the conclusion of the state elections and tabling of 2024 Budget, significant overhanging risks have now been alleviated for Sports Toto, offering a clearer operating environment," HLIB research said.
