Berjaya companies miss April rally effected by monetary stimuli

BCorp, BAssets, BToto and BFood see their share price depreciating by 3.3%, 8.62%, 3.48% and 3.36% respectively


THE rally on share prices since the market benchmark hit a decade low on March 19, 2020, has done little for the Berjaya group of companies.

The fiscal and monetary stimulus measures announced to combat the economic impact of the Covid-19 pandemic has seen the FTSE Bursa Malaysia KLCI rise 17.07% from its lows in March.

In the first two weeks of April, only 99 stocks recorded a negative growth in terms of share price, while an impressive 780 stocks surged between 0.33% to 200%.

The 7.87 advance-decline ratio month-to-date has not had the desired impact on the share prices of four companies under tycoon Tan Sri Vincent Tan’s Berjaya Group which were among the poor performing stocks in April.

Berjaya Corp Bhd (BCorp), Berjaya Assets Bhd (BAssets), Berjaya Sports Toto Bhd (BToto) and Berjaya Food Bhd (BFood) saw their share price depreciating by 3.3%, 8.62%, 3.48% and 3.36% respectively.

BCorp, a penny stock and one of Malaysia’s largest conglomerates with diversified interests across various business sectors, closed at 19 sen on April 17 from 22 sen on April 1, 2020.

Its market capitalisation also decreased by RM107 million to RM972 million from a billion early this month.

Media reports say BCorp will be embarking on a new property development project in Greenland. This is on top of its 75% stake in Icelandair Hotels ehf, which currently operates 20 hotels located all around Iceland.

Its investments in the two Nordic countries increase its presence in the European region, in line with BCorp’s geographical diversification and revenue expansion.

Prior to that, BCorp sold its hotel component of Four Seasons Hotel and Hotel Residences Kyoto in Japan for RM1.87 billion, a premium of RM198.76 million or about 11.87% over the market value of the hotel.

BAssets, the operator of Berjaya Times Square, also fell by three sen to 26 sen, leaving it with a market value of RM677.94 million by last Friday.

Operator of gaming, toto betting and numbers forecasting, BToto’s share price has fallen by eight sen in the first half of this month, reducing its market value by over a hundred million ringgit to RM2.97 billion.

BToto’s share-price decline was mainly caused by the Movement Control Order (MCO) which has led to the closure of its operations since March 18 affecting many of its draws.

Hong Leong Investment Bank Bhd analyst Andrew Lim Ken-Wern, in a note recently, stated a rough calculation on the reduction of draws would impact BToto’s bottom line by 9%.

The research arm maintained its ‘Hold’ call with an unchanged target price of RM2.26 on the counter.

“We feel BToto remains unexciting with the lack of a fresh catalyst given the challenging operating environment amid rampant illegal operators. Nonetheless, a dividend yield of 6.6% offers the saving grace,” Lim said.

Kenanga Investment Bank Bhd analyst Teh Kian Yeong believes the MCO will take away in total 12 draws for the year leading to an 8% cut in his financial year 2020 estimates.

“We may see additional special draws in the near future to raise tax revenues for the government in this difficult time, although it will not be earnings enhancing for BToto,” he said.

He stated the 16% year-to-date share price contraction has not fully reflected the Covid-19 risk yet, thus cutting the company’s target price to RM2.25.

The share price of BToto was barely hit by the Covid-19 outbreak initially in February when the stock was about 5% lower from its 52-week high of RM2.82, but the MCO has escalated the sell- down to push the stock to its 52-week low in the third week of March, 31% from its peak.

BCorp in its second quarter ended Dec 31, 2019, registered a revenue of RM2.08 billion, substantially contributed by the gaming business segment operated by Sports Toto Malaysia Sdn Bhd from its strong 4D Jackpot sales.