TANJONG: Da Ma Cai still undecided on prize pool verdict

KUCHING: Tanjong Public Limited Company’s (Tanjong) possible decision to reduce the prize pool for its gaming operations still remains unknown as that is one of the known possible move to mitigate the higher betting duties for its number forecast operators (NFOs).

Pan Malaysian Pools, a wholly-owned subsidiary of Tanjong, had been notified by the Ministry of Finance of a revision in betting duties to eight per cent from six per cent currently. The new rate applied to draws held from June 2010.

According to RHB Research Institute Sdn Bhd (RHB Research), a lower prize pool could in turn, adversely affect the group’s top line and it expected the prize pool to stay unchanged for this period.

The research firm further stated that the increase in betting duties appeared to be yet another unwelcomed development for the gaming division. Its gaming analyst believed that on the back of the recent sports betting licence incident, there could be potential backlash in the form of more protests by the opposition parties and the public against any other gaming liberalisation measures proposed by the government.

While no further liberalisation measures had been mentioned as yet, one such measure that could be affected was the new lotto game that Tanjong had been planning. Meanwhile, the racing totalisator (RTO) division had been hampered with escalating totalisator expenses, although the losses appear to have stabilised.

To recap, Tanjong recently declared a first interim gross dividend per share (DPS) of 20 sen. While Tanjong was expected to keep its quarterly dividends at this level, there was a possibility that a lower final gross DPS would be declared, compared with the financial year 2010’s DPS of 30 sen.

Among the risks that were brought forward were the stronger ringgit over the US dollar that would impact overseas power profits, the higher-than-expected NFO prize payout, the sovereign risk of overseas power projects, the change in landscape under the National Energy Plan as well as the high foreign shareholding (38.8 per cent as at end-May).

Based on all the given factors, RHB Research pegged its target price at RM19.20 per share. It further said the resolution of the operating losses incurred by the RTO segment would be both earnings and value-accretive but might take time.



-by Borneo Post