Booking.com

Booking.com

Favorite Links

Monday, May 22, 2017

Magnum under pressure, falls to multi-year low of RM1.81

Monday, 22 May 2017 | MYT 9:24 AM
BY JOSEPH CHIN

CIMB Equities Research downgraded Magnum from Hold to Reduce with a lower dividend discount model based target price of RM1.85.

KUALA LUMPUR: Magnum Bhd’s share price fell to multi-year low of RM1.81 early Monday after it reported a set of weaker financial results in the first quarter ended March 31, 2017 and also after it was slapped with a hefty taxes.

At 9.14am, it was trading at RM1.87, down 23 sen with 4.80 million shares done.

However, the FBM KLCI rose 5.4 points or 0.31% to 1,773.68. Turnover was 416.52 million shares valued at RM183.31mil. There were 350 gainers, 106 losers and 265 counters unchanged.

CIMB Equities Research downgraded Magnum from Hold to Reduce with a lower dividend discount model based target price of RM1.85.

The reduction followed its cut in its earnings per share and dividend per share for Magnum, which is involved numbers forecast operations, as the near-term downside risks outweigh its dividend yield appeal, said the research house.

“We see weak consumer sentiment and increasing incidences of punters shifting to illegal operators as de-rating catalysts and downside risks to dividend payout. An upside risk to our call is stronger-than-expected government clampdown on illegal betting,” it said.

CIMB Research said Magnum’s 1Q17 revenue contracted 7.4% on-year to RM697.1mil, while core net profit fell by a larger 54.9% on-year to RM31.4mil.

Also weighing on the share price was on news that Magnum and its unit Magnum Holdings Sdn Bhd (MHSB) had received respective notices of assessment from the Inland Revenue Board of Malaysia (IRB) for the years of 2008, 2011-2015 (Magnum) and 2008-2013 (MHSB), totalling RM476.4mil.

These assessments follow the disallowance of deduction for interest expenses on certain investments. Management stated that it is looking to contest the validity and legality of the notices.

“Should Magnum be forced to fork out the full amount of RM476.4mil (equivalent to 33 sen per share), the tax bill would more than wipe out the group’s FY17F net profit of RM161mil (based on our estimates),” CIMB Research said.


Read more at http://www.thestar.com.my/business/business-news/2017/05/22/magnum-under-pressure-falls-to-multi-year-low/#mx5zImVC70WUTIXr.99

No comments:

Post a Comment