KUALA LUMPUR: RHB Research has cut its earnings forecast on Magnum Bhd as ticket sales recovery may be slowed by the implementation of MCO3.0.
The research house said punters are expected to exercise caution during this period and avoid going to crowded places while others may buy from illegal operators due to the ease of transaction.
“Consequently, we cut our FY21F-23F earnings by 10.4-4.3% after lowering our ticket sales assumptions,” it said while reiterating its “buy” call on the stock with a lowered target price of RM2.73.
However, RHB points out that the MCO3.0 disruption is a short-term hurdle given the rollout of the vaccines.
“Once the vaccination curve steepens and COVID19 cases become lesser, we expect ticket sales to recover strongly under a normalised business environment.
“NFOs are known to be resilient and demand is fairly inelastic, even in a dull macroeconomic environment,” it said.
It added that Magnum is its preferred sector pick for being a pure-play numbers forecast operator.
Magnum’s ticket sales hovered at about 20% of pre-pandemic levels during MCO2.0 due to the closure of most outlets from Jan 13 to Feb 15.
Since re-opening on Feb 16, ticket sales were able to recover swiftly to 80% to 85% of pre-pandemic levels.
RHB estimates that 1Q21’s average jackpot tickets sales have fallen about 18% quarter-on-quarter and 32% year-on-year despite a bigger average jackpot size.