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Berjaya Bjtoto
 

Berjaya Bjtoto

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• B-Toto is worth a bet now as i) its core gaming operations remained resilient even ...

• B-Toto is worth a bet now as i) its core gaming operations remained resilient even
during the post-CNY off-peak period and appear likely to surpass our 6-7% gaming
revenue growth target for FY4/09, ii) 2009’s special draw allocations for all three
NFOs could take place over the next few weeks and iii) there is upside potential to its
6-8% gross dividend yield based on its policy of a minimum payout of 75% if B-Toto
dishes out higher dividends to lend its parent a helping hand.
• Adjusting earnings but implied yields still decent. We raise our FY09-11’s
revenue per draw growth assumptions by 2-4% pts following the stronger-thanexpected
YTD showing. But FY10-11’s bottomline is lowered by 4-5% as we also
raise our blended prize payout assumption from 62-64% to 63-64% to better reflect
the payout trends seen so far. FY09’s numbers are largely intact despite these
adjustments. Even after a 3-5% cut in our FY10-11 DPS projections (unchanged
80% payout ratio), our forecasts still imply a decent yield.
• Reiterate OUTPERFORM. Our DPS downgrades trim our end-CY09 target price
from RM5.95 to RM5.65, based on an unchanged 5% discount to its DDM value. We
continue to like B-Toto for its steady, low-risk topline growth, superior ROEs and
sustainable dividend yields. Being a low-beta stock, B-Toto may fall out of favour in a
rising market. However, we flag the likelihood of bumper dividends over the short
term. This is a potential share price catalyst that underpins our OUTPERFORM
recommendation, along with the normalisation of luck factor and market share gains.

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    Berjaya Bjtoto Berjaya Bjtoto Document Transcript

    • COMPANY UPDATE 28 April 2009 MALAYSIA CIMB Research Report OUTPERFORM Maintained Berjaya Sports Toto Bhd RM4.72 @27/04/09 A worthwhile bet Target: RM5.65 Gaming BST MK / BSTB.KL Soh May Yee +60 (3) 2084 9964 – mayyee.soh@cimb.com • B-Toto is worth a bet now as i) its core gaming operations remained resilient even during the post-CNY off-peak period and appear likely to surpass our 6-7% gaming revenue growth target for FY4/09, ii) 2009’s special draw allocations for all three NFOs could take place over the next few weeks and iii) there is upside potential to its 6-8% gross dividend yield based on its policy of a minimum payout of 75% if B-Toto dishes out higher dividends to lend its parent a helping hand. • Adjusting earnings but implied yields still decent. We raise our FY09-11’s revenue per draw growth assumptions by 2-4% pts following the stronger-than- expected YTD showing. But FY10-11’s bottomline is lowered by 4-5% as we also raise our blended prize payout assumption from 62-64% to 63-64% to better reflect the payout trends seen so far. FY09’s numbers are largely intact despite these adjustments. Even after a 3-5% cut in our FY10-11 DPS projections (unchanged 80% payout ratio), our forecasts still imply a decent yield. • Reiterate OUTPERFORM. Our DPS downgrades trim our end-CY09 target price from RM5.95 to RM5.65, based on an unchanged 5% discount to its DDM value. We continue to like B-Toto for its steady, low-risk topline growth, superior ROEs and sustainable dividend yields. Being a low-beta stock, B-Toto may fall out of favour in a rising market. However, we flag the likelihood of bumper dividends over the short term. This is a potential share price catalyst that underpins our OUTPERFORM recommendation, along with the normalisation of luck factor and market share gains. Financial summary FYE Apr 2007 2008 2009F 2010F 2011F Revenue (RM m) 3,035.3 3,277.8 3,633.9 3,656.5 3,729.1 EBITDA (RM m) 558.6 530.1 595.5 644.6 657.7 EBITDA margins (%) 18.4% 16.2% 16.4% 17.6% 17.6% Pretax profit (RM m) 545.3 502.6 577.4 623.4 639.9 Net profit (RM m) 375.7 348.7 405.6 438.8 450.6 EPS (sen) 27.8 25.8 30.0 32.5 33.4 EPS growth (%) (23.3%) (7.2%) 16.3% 8.2% 2.7% P/E (x) 17.0 18.3 15.7 14.5 14.2 FD core P/E (x) 17.0 18.3 15.7 14.5 14.2 Gross DPS (sen) 45.0 35.0 30.0 35.0 36.0 Dividend yield (%) 9.5% 7.4% 6.4% 7.4% 7.6% P/BV (x) 15.2 19.3 16.6 13.6 11.5 ROE (%) 45.3% 93.1% 113.3% 102.7% 88.0% Net gearing (%) 52.7% 66.1% 39.5% 14.7% N/A Net cash per share (RM) N/A N/A N/A N/A 0.02 P/FCFE (x) 8.0 22.6 19.5 15.9 14.0 EV/EBITDA (x) 11.8 12.5 11.0 10.0 9.7 % change in EPS estimates - -3.8% -4.8% CIMB/Consensus (x) 0.94 0.96 0.92 Source: Company, CIMB Research, Bloomberg Price chart Market capitalisation & share price info 12M Market cap RM6,377m/US$1,771m Share price perf. (%) 1M 3M 5.00 5.4 4.50 (9.3) (7.4) 22.8 12-mth price range RM5.15/RM4.22 Relative 4.00 5.2 3.50 5.0 0.4 4.0 (6.5) 3-mth avg daily volume 0.9m Absolute 3.00 4.8 2.50 % held # of shares (m) 1,351 Major shareholders 2.00 4.6 1.50 51.4 4.4 Est. free float (%) 35.0 Berjaya Land 1.00 4.2 0.50 5.6 Conv. secs (m) None Tan Sri Vincent Tan 0.00 4.0 Apr-08 Sep-08 Feb-09 Conv. price ( ) Volume 1m (R.H.Scale) Berjaya Sports Toto Bhd Source: Bloomberg Source: Company, CIMB Research, Bloomberg Please read carefully the important disclosures at the end of this publication.
    • Background After our recent teleconversation with the management of Berjaya Sports Toto (B-Toto), we arrived at the following conclusions: i) B-Toto’s core gaming operations remained resilient even during the post-CNY off-peak period and appear likely to surpass our 6- 7% gaming revenue growth target for FY4/09, ii) 2009’s special draw allocations for all three number forecast operators (NFOs) could take place over the next few weeks, and iii) the group remains committed to its minimum 75% dividend payout policy. Core operations in resilient mode Post-CNY trends still holding up. Despite the lacklustre economic conditions, post- CNY punting interest has not fallen drastically from the off-peak norms witnessed during previous years, based on management feedback. This is supported by our observations during random visits to several key outlets over the weekends. Such a scenario is not overly surprising and supports our earlier view that the NFO segment should be able to weather the economic storm given the low entry cost for both 4D and lottery games. Satisfactory 4QFY4/09 sales expected … We expect the upcoming 4QFY4/09 results to show a more pronounced CNY effect than its preceding quarter given CNY’s two- week impact in February vs. one week in January. Having said that, we note that 4Q09 played host to six fewer draw days than 3Q09’s 46 draw days which was a record high (Figure 1). Also, with the Mega 6/52 Jackpot offering an average jackpot of RM6.5m so far in 4Q vs. 3Q09’s RM11.2m average, contributions from the lotto segment are expected to normalise qoq. We highlighted before the positive correlation between historical ticket sales and jackpot sizes (Figure 2 & 3). This correlation is further affirmed by the trend so far in 4Q that shows a lower lotto revenue average of about RM1.0m vs. last quarter’s RM1.5m. Taking all these into consideration, we expect B- Toto to post a weaker 4Q09 topline qoq. … but on track to post record high topline in FY09. Notwithstanding a relatively unexciting 4Q09, B-Toto appears on track to rack up another record for turnover in FY09. 9MFY09 revenue is already showing strong double-digit growth of 17% yoy. With the 9M topline making up 81% of our full-year forecast, our projection appears increasingly conservative given that post-CNY revenues have been holding up well. Although we expect 4Q09’s revenue per draw to dip qoq, our current projections imply a drastic double-digit yoy drop. As such, B-Toto’s FY09 topline could easily breach the RM3.5bn mark for the first time. Figure 1: B-Toto’s quarterly breakdown of draw days 1QFY09 2QFY09 3QFY09 4QFY09 FY09 FY08 Normal draws 39 39 40 38 156 157 Special draws 0 2 6 2 10 8 Total draw days 39 41 46 40 166 165 Source: Company, CIMB Research Figure 2: B-Toto’s lotto revenue per draw trend (RM m) Lotto Revenue (LHS) Cumulative Jackpot Offering (RHS) 4.0 40 35 3.0 30 25 2.0 20 15 1.0 10 5 0.0 0 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Source: Company, CIMB Research [2]
    • Figure 3: Correlation between Mega 6/52 sales and jackpot size Mega 6/52 revenue (LHS) Mega 6/52 Jackpot (RHS) 2.5 25 2.0 20 1.5 15 1.0 10 0.5 5 0.0 0 Jun-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Source: Company, CIMB Research Luck turning in B-Toto’s favour? We have assumed an average prize payout of c. 64% for FY09, broadly in line with the YTD payout. But because of a lower revenue base, this implies a gross payout of about 62% for 4Q09, below the blended theoretical of about 63-64%. To recap, B-Toto was weighed down by a higher 67% prize payout during 3Q09. During our recent update with management, we learnt that the luck factor has normalised from last quarter and should be better than 4Q08’s 70%. On a full-year basis, prize payout is expected to be slightly better than last year’s 65%, suggesting that our current 63.5% could be slightly optimistic. Lotto advantage – driving revenue per draw upwards. We expect B-Toto’s revenue per draw to reach a record level in FY09 (Figure 4). To recap, the highest quarterly revenue per draw growth (+21.6% yoy) was seen in 2QFY09. Besides sustained punting interest for its flagship 4D games, 2Q’s impressive yoy growth could have also been due to the 6/52 Mega Jackpot offering its highest ever payout of RM20m for a good eight weeks during the quarter. 9MFY09 revenue per draw stood at RM22.3m, already 16% higher yoy. B-Toto’s FY09 revenue per draw appears set to breach the RM20m mark for the first time and could easily surpass our assumption of RM20.9m. Going forward, the Dec 08 increase in the maximum jackpot payout for its Mega 6/52 lotto variant from RM20m to RM30m is expected to sustain, if not increase, lotto punting interest as the jackpot gradually snowballs. Figure 4: B-Toto’s revenue per draw growing steadily (RM m) 22 20 18 16 14 12 10 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09F Source: Company, CIMB Research Extending pole position further. Besides providing an additional revenue stream, B- Toto’s monopolistic lotto offering is also benefiting its flagship 4D games indirectly by attracting more punters to its network of outlets. It is, therefore, not entirely surprising that B-Toto continues to gain market share in the mature NFO market. B-Toto’s more extensive network of 680 outlets vs. its peers’ 350-480 outlets could have also helped it to claw about 1% pt of market share in 2H08 to 42% (Figure 5). Growth momentum to chug along with industry’s. With a minimal cash outlay requirement coupled with its habitual nature, the NFO segment should exhibit resilience despite the uncertain macro environment. We forecast an unexciting 1-2% annual growth for the overall market over the next three years, with the marginal uptick largely fuelled by the country’s rising younger population. As it already has a large base, B- Toto should be able to leverage its market leadership and lotto advantage to keep pace with the wider NFO sector’s growth momentum. [3]
    • Figure 5: Comparison of market share (%) 50 B-Toto Magnum Tanjong 45 40 35 30 25 20 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E Source: Company, CIMB Research Special draws for 2009 as well? Completed 2008’s allocation. B-Toto conducted the last two special draws of its 2008 allocation at end-Feb 09 and early Mar 09. These draws will be reflected in its 4QFY09 results, bringing total draw days to 40 days, exactly matching 4Q08’s tally but six less than in 3Q09. To recap, B-Toto’s impressive 3Q09 topline growth of 23% yoy was partly boosted by the six special draw days which fell within the quarter, bringing total draw days to a record 46 days. The other two NFO players are expected to complete their 2008 allocations by end-May 09. Special draws – a win-win situation. While special draws are allocated at the discretion of the government, a check of the past eight years showed that special draws were indeed an annual feature (Figure 6). The consistency of such allocations is not a surprise as special draws are known to pad the government’s tax coffers more effectively than a tax hike. Special draws are accompanied by an additional 10% tax on revenues earned for an equivalent number of preceding draws. As a result, both the government (extra tax collection) and the NFO players (additional topline source) stand to gain from such allocations. Only a matter of time? Given the historical consistency of such allocations, we continue to believe that special draws will remain an annual feature for the NFO players. Although such draws are usually dished out during 1Q, 2008’s allocation took place only in Oct 08 because of the change in the domestic political landscape following the Mar 08 general election. For 2009, we are not particularly surprised that the government did not stick to its pre-2008 practice of announcing such allocations during 1Q. This is because up to now, the other two NFOs are still taking turns to complete their 2008 allocations. Timing-wise, we believe that such allocations could be allotted as soon as the next few weeks. Our current earnings projections impute five special draw days each for FY10 and FY11, which is low compared to the 8-15 days allocated over the past five years. Assuming i) a normalised luck factor and ii) revenue per draw of RM21m, every extra special draw day allocation could add 0.5-0.6% to the bottomline. Figure 6: Number of draw days for B-Toto FY Normal draws Special draws Total draws FY02 156 5 161 FY03 157 6 163 FY04 156 10 166 FY05 157 13 170 FY06 157 15 172 FY07 156 12 168 FY08 157 8 165 FY09 156 10 166 FY10F 156 5 161 FY11F 157 5 162 Source: Company, CIMB Research Betting on bumper dividends? A minimum 75% DPS payout policy. Although the dividends that B-Toto has declared YTD work out to a payout ratio of only 58.9%, the group stressed that it remains committed to a minimum 75% payout for the full year. Assuming no sharp fluctuations in [4]
    • the luck factor, this suggests a bumper gross DPS of 11 sen in 4Q09, more than 80% higher qoq and about 20% higher than the 4Q08 DPS. If so, this could take the total gross DPS for FY09 to 30 sen, equivalent to 6.4% gross yield. Slim possibility of higher payout… Based purely on B-Toto’s YTD payout, which is noticeably below the 75% minimum level, it appears too optimistic to assume that FY09 total payout could be much higher than 75%. Also, we note that FY05-08’s >100% dividend payouts were undertaken, we believe, to help its parent, Berjaya Land (BL MK, Not Rated), to settle the latter’s inter-company loans. With the inter-company loan issue settled and out of the picture, we earlier thought it overoptimistic to assume higher payouts going forward. … or not? However, we note that Berjaya Land is likely to require up to RM880m cash over the next 3-6 months as its 5-year exchangeable bonds have a put option allowing bondholders to redeem the bonds at nominal value come mid-August. Although the bonds currently offer an attractive annual coupon rate of 8%, bondholders are likely to exercise the option given that i) the bonds are currently out of the money, ii) better- quality commercial paper is available and iii) uncertainty envelops the bond market in general. Based on BLand’s RM588m cash balance as at end-Jan 09, it probably has to raise funds to allow for the possibility of full redemption. What are BLand’s options? One way is for BLand to refinance the bonds via additional borrowings but this may be difficult currently given the tight credit market. BLand could pledge its B-Toto shares to facilitate the borrowings but this raises unnecessary shareholding-related risks. Alternatively, BLand could consider asset disposals but this seems impractical as asset valuations are currently depressed. How can B-Toto help? Given its cash-generative NFO business and manageable net gearing of less than 0.2x as at end-Jan 09, the market is speculating that B-Toto could lend a helping hand by gearing up to declare bumper and/or special dividends. Such a move would not be a huge surprise as B-Toto has adopted dividend payouts in excess of 100% in the past, probably to pave the way for BLand to settle its inter-company loans. Distributing all of distributable reserves ... Based on B-Toto’s distributable reserves of RM453m as at end-Jan 09, it could announce a gross DPS of up to 45 sen on top of its normal DPS declarations. This could add 9.4% gross yield to its already sustainable yield of 6-8%. Based on B-Land’s 51% stake in B-Toto, this could channel up an additional RM230m to BLand, equivalent to 26% of the RM880m face value of BLand’s exchangeable bonds. However, such an exercise, in isolation, could slash B-Toto’s shareholders’ funds by 85-95% and raise FY09-10 net gearing to a glaringly high level of 7-34x. Also, higher interest expense arising from new borrowings could compromise the sustainability of B-Toto’s future dividends. ... or easier to distribute share dividends? Alternatively, B-Toto could dish out share dividends. As at end-Jan 09, it had accumulated some 95m treasury shares at an average price of RM4.27. Although it has no specific plans for these treasury shares at this juncture, a potential 1-for-14 share dividend distribution could release an additional 33 sen gross DPS equivalent, based on B-Toto’s latest closing price of RM4.72/share. This, together with B-Toto’s 30-36 sen gross cash DPS, could bring about a bumper 63 sen gross DPS. Unlike the first option, this share distribution exercise should not affect B-Toto’s gearing and its future dividend payouts. Based on BLand’s 51% stake, this option could inject another RM170m on top of BLand’s existing cash balance of RM588m as at end-Jan 09. What about capital repayment? Given the RM0.10 par value of its shares and its small share capital base of RM135m, the likelihood of a capital repayment exercise by B-Toto remains very slim. To recap, B-Toto has undertaken two capital repayment exercises in the past. Figure 7: Summary of B-Toto’s cash distribution options Option 1 Option 2 Maximum cash DPS Share dividend distribution Existing FY09F gross DPS (sen) 30.0 30.0 Bumper dividend (assuming maximum payout) (sen) 44.5 - Treasury share distribution (shares) - 1-for-14 Cash equivalent (sen) - 33.0 Total FY09F gross DPS (sen) 74.5 63.0 Gross DPS yield (%) 15.8 13.3 Potential FY09-10 net gearing (x) 7-34 0.2-0.4 Source: Company, CIMB Research [5]
    • Other cash needs at B-Toto level? In view of its minimal capex needs and unexciting offers on the M&A front, we believe that B-Toto’s annual profits are likely to be split between dividend payments and debt repayments. The latter is estimated at about RM30m-35m per quarter. Valuation and recommendation Revisiting key assumptions … With i) 9MFY09 topline already accounting for 81% of our full-year forecast and ii) 4QFY09 trends post CNY not deviating materially from previous years’ off-peak norms, we are raising FY09’s revenue per draw growth assumption by 2-4% pts. Our revised assumption implies a higher 10-11% topline growth for FY09 vs. 6-7% previously and 9MFY09’s 17% yoy uptick. We have also raised FY09’s prize payout assumption to 64.2% from 63.5% to align it with 9MFY09’s average prize payout of about 64.4%. … adjusting FY10-11 earnings by 4-5%. These offsetting adjustments effectively keep our FY09 core net profit projection intact at RM405m. But for FY10-11, we are lowering our earnings projections by 4-5% as higher prize payout assumptions of about 63% (62% previously) more than offset the 2-3% uptick in revenue per draw growth following FY09’s higher base. Post earnings adjustments, our FY10-11 DPS projections are lowered by 3-5%, still based on an unchanged 80% payout ratio. We have not assumed any special and/or bumper DPS payouts in our earnings model. Reiterate OUTPERFORM. Our DPS downgrades trim our end-CY09 target price from RM5.95 to RM5.65, based on an unchanged 5% discount to its DDM value. We continue to like B-Toto for its steady, low-risk topline growth, superior ROEs and sustainable dividend yields. Being a low-beta stock, B-Toto may fall out of favour in a rising market. However, we flag the likelihood of bumper dividends over the short term. This is a potential share price catalyst that underpins our OUTPERFORM recommendation, along with the normalisation of luck factor and market share gains. [6]
    • Financial tables PROFIT & LOSS KEY RATIOS (RM m, FYE Apr) (FYE Apr) 2007 2008 2009F 2010F 2011F 2007 2008 2009F 2010F 2011F Revenue 3,035 3,278 3,634 3,657 3,729 Revenue growth (%) 3.3 8.0 10.9 0.6 2.0 Operating expenses (2,477) (2,748) (3,038) (3,012) (3,071) EBITDA growth (%) 6.0 (5.1) 12.3 8.2 2.0 EBITDA 559 530 596 645 658 Pretax margins (%) 18.0 15.3 15.9 17.0 17.2 Depreciation & amortisation (11) (15) (13) (14) (15) Net profit margins (%) 12.4 10.6 11.2 12.0 12.1 EBIT 547 515 583 631 643 Interest cover (x) 19.0 23.0 48.0 54.7 58.7 Net interest & invt income (1) (12) (6) (8) (3) Effective tax rates (%) 29.9 28.6 28.0 28.0 28.0 Associates’ contribution 0 0 0 0 0 Net dividend payout (%) 118.1 100.4 74.9 80.8 80.9 Exceptional items 0 0 0 0 0 Debtors turnover (days) 11.9 9.7 9.2 9.6 9.6 Others (1) 0 0 0 0 Stock turnover (days) 1.5 1.0 0.8 0.9 0.9 Creditors turnover (days) 25.5 25.1 25.9 27.2 27.0 Pretax profit 545 503 577 623 640 Tax (163) (144) (162) (175) (179) Minority interests (7) (10) (10) (10) (10) Net profit 376 349 406 439 451 Adj. wt. shares (m) 1,351 1,351 1,351 1,351 1,351 Unadj. year-end shares (m) 1,351 1,351 1,351 1,351 1,351 KEY DRIVERS BALANCE SHEET (RM m, end Apr) (FYE Apr) 2007 2008 2009F 2010F 2011F 2008 2009F 2010F 2011F Fixed assets 92 95 101 108 114 Revenue growth (%) 7.3% 11.0% 0.6% 2.0% Intangible assets 618 618 618 618 618 Revenue per draw day (RM m) 19.70 21.73 22.54 22.85 Other long-term assets 83 90 80 70 60 Prize payout ratio (%) 64.9% 64.2% 62.9% 62.9% No. of outlets 680 680 680 680 Total non-current assets 793 803 800 796 792 Cash and equivalents 247 126 78 155 236 Stocks 10 8 9 9 9 Trade debtors 88 87 96 97 99 Other current assets 75 0 0 0 0 Total current assets 420 221 183 260 344 Trade creditors 205 245 271 273 278 Short-term borrowings 113 123 49 47 44 Other current liabilities 56 27 26 26 26 Total current liabilities 374 394 347 346 349 Long-term borrowings 360 238 190 181 171 Other long-term liabilities 51 38 37 37 37 Total long-term liabilities 411 276 227 218 209 Shareholders’ funds 418 331 385 469 555 Minority interests 10 23 23 23 23 NTA/share (RM) (0.15) (0.21) (0.17) (0.11) (0.05) CASH FLOW 12M - FORWARD FD CORE P/E (X) (RM m, FYE Apr) 2007 2008 2009F 2010F 2011F 20.0 Pretax profit 545 503 577 623 640 19.0 Depreciation & non–cash adj. 11 15 13 14 15 Working capital changes 12 43 16 1 3 18.0 Cash tax paid (118) (182) (144) (162) (175) 17.0 Others (2) (44) 0 (46) (2) Cash flow from operations 449 334 462 430 482 16.0 Capex (33) (18) (19) (20) (21) 15.0 Net investments & sale of FA 4 15 10 10 10 Others 489 76 0 0 0 14.0 Cash flow from investing 460 73 (9) (10) (11) 13.0 Debt raised/(repaid) (103) (113) (121) (12) (11) Equity raised/(repaid) (712) (125) (20) (20) (20) 12.0 Dividends paid (493) (278) (355) (304) (355) May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Cash interest & others (14) (13) (6) (8) (3) Cash flow from financing (1,322) (528) (501) (343) (389) Change in cash (413) (121) (48) 77 82 Change in net cash/(debt) (310) (8) 73 89 93 Ending net cash/(debt) (226) (234) (161) (72) 21 Source: Company, CIMB Research, Bloomberg [7]
    • DISCLAIMER This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. By accepting this report, the recipient hereof represents and warrants that he is entitled to receive such report in accordance with the restrictions set forth below and agrees to be bound by the limitations contained herein (including the “Restrictions on Distributions” set out below). Any failure to comply with these limitations may constitute a violation of law. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this report may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB. CIMB, its affiliates and related companies, their directors, associates, connected parties and/or employees may own or have positions in securities of the company(ies) covered in this research report or any securities related thereto and may from time to time add to or dispose of, or may be materially interested in, any such securities. Further, CIMB, its affiliates and its related companies do and seek to do business with the company(ies) covered in this research report and may from time to time act as market maker or have assumed an underwriting commitment in securities of such company(ies), may sell them to or buy them from customers on a principal basis and may also perform or seek to perform significant investment banking, advisory or underwriting services for or relating to such company(ies) as well as solicit such investment, advisory or other services from any entity mentioned in this report. The views expressed in this report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations(s) or view(s) in this report. CIMB prohibits the analyst(s) who prepared this research report from receiving any compensation, incentive or bonus based on specific investment banking transactions or for providing a specific recommendation for, or view of, a particular company. However, the analyst(s) may receive compensation that is based on his/their coverage of company(ies) in the performance of his/their duties or the performance of his/their recommendations and the research personnel involved in the preparation of this report may also participate in the solicitation of the businesses as described above. In reviewing this research report, an investor should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additional information is, subject to the duties of confidentiality, available on request. The term “CIMB” shall denote where applicable the relevant entity distributing the report in that particular jurisdiction where mentioned specifically below shall be a CIMB Group Sdn Bhd’s affiliates, subsidiaries and related companies. (i) As of 27 April 2009, CIMB has a proprietary position in the following securities in this report: (a) Berjaya Sports Toto, Berjaya Sports Toto Warrant. (ii) As of 28 April 2009, the analyst, Soh May Yee who prepared this report, has an interest in the securities in the following company or companies covered or recommended in this report: (a) -. The information contained in this research report is prepared from data believed to be correct and reliable at the time of issue of this report. This report does not purport to contain all the information that a prospective investor may require. 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This publication is strictly confidential and is for private circulation only to clients of CIMB-GKI. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB-GKI. Neither this report nor any copy hereof may be distributed in Indonesia or to any Indonesian citizens wherever they are domiciled or to Indonesia residents except in compliance with applicable Indonesian capital market laws and regulations. Malaysia: This report is issued and distributed by CIMB Investment Bank Berhad (“CIMB”). The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMB has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only to clients of CIMB. This publication is being supplied to you strictly on the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB. [8]
    • New Zealand: In New Zealand, this report is for distribution only to persons whose principal business is the investment of money or who, in the course of, and for the purposes of their business, habitually invest money pursuant to Section 3(2)(a)(ii) of the Securities Act 1978. Singapore: This report is issued and distributed by CIMB-GK Research Pte Ltd (“CIMB-GKR”). Recipients of this report are to contact CIMB-GKR in Singapore in respect of any matters arising from, or in connection with, this report. The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMB-GKR has no obligation to update its opinion or the information in this research report. This publication is strictly confidential and is for private circulation only. 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RECOMMENDATION FRAMEWORK #1* STOCK RECOMMENDATIONS SECTOR RECOMMENDATIONS OUTPERFORM: The stock's total return is expected to exceed a relevant OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is benchmark's total return by 5% or more over the next 12 months. expected to outperform the relevant primary market index over the next 12 months. NEUTRAL: The stock's total return is expected to be within +/-5% of a relevant NEUTRAL: The industry, as defined by the analyst's coverage universe, is benchmark's total return. expected to perform in line with the relevant primary market index over the next 12 months. UNDERPERFORM: The stock's total return is expected to be below a relevant UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, benchmark's total return by 5% or more over the next 12 months. is expected to underperform the relevant primary market index over the next 12 months. TRADING BUY: The stock's total return is expected to exceed a relevant TRADING BUY: The industry, as defined by the analyst's coverage universe, is benchmark's total return by 5% or more over the next 3 months. expected to outperform the relevant primary market index over the next 3 months. TRADING SELL: The stock's total return is expected to be below a relevant TRADING SELL: The industry, as defined by the analyst's coverage universe, benchmark's total return by 5% or more over the next 3 months. is expected to underperform the relevant primary market index over the next 3 months. * This framework only applies to stocks listed on the Singapore Stock Exchange, Bursa Malaysia, Stock Exchange of Thailand and Jakarta Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons. CIMB-GK Research Pte Ltd (Co. Reg. No. 198701620M) [9]
    • RECOMMENDATION FRAMEWORK #2 ** STOCK RECOMMENDATIONS SECTOR RECOMMENDATIONS OUTPERFORM: Expected positive total returns of 15% or more over the next OVERWEIGHT: The industry, as defined by the analyst's coverage universe, 12 months. has a high number of stocks that are expected to have total returns of +15% or better over the next 12 months. NEUTRAL: Expected total returns of between -15% and +15% over the next NEUTRAL: The industry, as defined by the analyst's coverage universe, has 12 months. either (i) an equal number of stocks that are expected to have total returns of +15% (or better) or -15% (or worse), or (ii) stocks that are predominantly expected to have total returns that will range from +15% to -15%; both over the next 12 months. UNDERPERFORM: Expected negative total returns of 15% or more over the UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, next 12 months. has a high number of stocks that are expected to have total returns of -15% or worse over the next 12 months. TRADING BUY: Expected positive total returns of 15% or more over the next 3 TRADING BUY: The industry, as defined by the analyst's coverage universe, months. has a high number of stocks that are expected to have total returns of +15% or better over the next 3 months. TRADING SELL: Expected negative total returns of 15% or more over the next TRADING SELL: The industry, as defined by the analyst's coverage universe, 3 months. has a high number of stocks that are expected to have total returns of -15% or worse over the next 3 months. ** This framework only applies to stocks listed on the Hong Kong Stock Exchange and China listings on the Singapore Stock Exchange. Occasionally, it is permitted for the total expected returns to be temporarily outside the prescribed ranges due to extreme market volatility or other justifiable company or industry-specific reasons. [ 10 ]