Sunday, March 31, 2013


After years of enjoying high dividend payout from cash rich BJToto, investors could be in for lower dividends for full fiscal year 2013.

The lower dividend payout is due to mainly to the company’s need to maintain a comfortable level of retained earnings to undertake the listing of STM as a business trust on SGX and thereafter pay out special cash dividend and distributing bulk of the trust units to shareholders.

Given that he group is unlikely to declare more dividends until the listing of STM-Trust, market observers anticipated no dividend to be declared in 4QFY2013.

BJToto is expected make a capital repayment of more than 40 sen per share from an offer for sale/placement of STM-Trust shares to be listed in SGX, and latter a dividend in specie of STM-Trust shares pending approval.

The restructuring would expand its shareholder base, provide access to cheap financing and halve gearing to 0.6 times.

The listing of STM-Trust is expected to be completed in April 2013. The listing will raise about rm1.24 billion.

BJtoto announced on June 5 2013 that it would transfer its entire equity interest in STM, which holds the lottery license to STM-Trust in a deal valued at rm6 billion.

Generally, market observers are not excited over the prospects of STM-Trust’s listing in Singapore due mainly to the earnings dilution faced by BJtoto shareholders post listing of STM-Trust.

BJtoto risks being overlooked as investors may choose to buy STM-Trust directly potentially yield 6% or MPHB which offers exposure to the resilient Malaysian NFO.

The combined effects of upcoming dilution of its interest in STM arising from its injection into a business trust but partially compensated by capital repayment and potential de rating as a holding company post listing of the business trust.

Market observers advice investors to switch to MPHB as it is expected to be re rated on potential domestic gaming liberalization, capital management and cyrstalization of hidden intrinsic value in non gaming assets. MPHB will be a pure NFO stock once the demerger is completed sometime in 2013 due to exposure to its pure gaming and dividend play counter.

Once the listing of STM-Trust is completed, BJTOto will be reduced to a holding company with only its Philippine operations and the STMM trustee manager as revenue generator sources.

As such, it is widely expected for BJtoto to be delisted at a later date following the completion of the listing of STM Trust. It does not make sense for BJtoto to maintain its listing structure just to hold investment in a trust.

In the event that happens, MPHB will be the sole counter with direct exposure to the resilient NFO market.

1 comment:

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