Number forecast operators (NFOs) Sports Toto Bhd and Magnum Bhd both witnessed just a slight decline in their share prices at the close of trade today. Sports Toto’s shares dropped by 4 sen or 2.61% to RM1.49, while Magnum’s shares fell 3 sen or 2.56% to RM1.14.
Meanwhile, the brewery counters were even less affected. Carlsberg Brewery Malaysia Bhd saw a marginal decline of 6 sen or 0.29% to RM20.52, valuing the group at RM6.26 billion.
Heineken Malaysia Bhd’s shares dropped by 26 sen or 0.99% to RM25.90, giving the company a market capitalisation of RM7.82 billion.
In Selangor, Sports Toto has 78 outlets, accounting for 21.9% of its total. Magnum operates 85 outlets (18% of total outlets) while Pan Malaysian Pools Sdn Bhd, the operator of Da Ma Cai, has 78 outlets (23.6%) in the state.
Ethical values or economic growth?
Hong Leong Investment Bank (HLIB) Research said while the six state elections resulted in a status quo outcome overall, PN experienced a notable increase in seats (+68% compared to 2018).
However, the research outfit said this outcome is unlikely to directly influence the federal level, given that the next general election is only scheduled for 2027.
“A knee-jerk reaction on the local bourse (especially for brewers and gaming stocks) is possible as investors digest the voter base shift from centrist to a more conservative one,” it said in a research note today.
Meanwhile, an analyst with a securities firm said the brewery and gaming sectors make up close to 2% of government revenues when it comes to taxes.
On the possibility of PN shutting down these cash cows if it wins a future election, she said PN would have to explore alternative revenue streams, she said.
“Thus (PN) will need to find new sources of revenues before they do anything drastic to nail the gaming companies and breweries,” the analyst told FMT Business.
In a note today, Maybank Investment Bank Bhd (Maybank IB) upgraded Magnum Bhd to a “buy” at RM1.17 with a higher target price (TP) of RM1.25, from 91 sen earlier.
Additionally, it revised Magnum’s earnings per share projections by 10%, dividend per share by 13%, and raised the discounted cashflow (DCF)-TP to RM1.25.
However, it granted Magnum a subpar rating of 35/100 in its environmental, social, and governance (ESG) 2.0 evaluation framework, citing insufficient transparency in disclosures and concrete medium to long-term objectives.