4D prize cuts to have minimal impact on NFOs’ earnings

The revised prize structure of two numbers forecast operators (NFOs), Magnum Corp Sdn Bhd and Berjaya Sports Toto Bhd, could see little positive impact on their earnings as savings go towards compensating for the increase in betting duty and potentially lower sales.

Analysts note that the ministry of finance’s recent move to allow both NFOs to reduce their special prize payouts was not entirely unexpected given that the government had in June increased the pool betting duty to 8% from 6% previously.

Kenanga Investment Research head Yeonzen Yeow said there could be no change if the NFOs’ reduction in revenue is greater than any potential savings from a lower payout rate.

“In the initial stages we could see a knee-jerk reaction where the revenue could come off a little but it could go back (up),” Yeow said. However, he also pointed out that the lower payouts could drive some customers to illegal NFO operators.

Alternatively, companies could make up for lower sales by employing more aggressive marketing strategies or seeking government approval for additional draw days, Yeow added.

In separate filings to Bursa Malaysia on Monday, Multi-Purpose Holdings Bhd (MPHB) and Berjaya Sports Toto announced that their respective units, Magnum Corp and Berjaya Sports Toto, had received approval from the ministry of finance to reduce the special prize payout for their 4Digit Big Game.

The revision will see the 4Digit Big Game special prizes reduced from RM200 per RM1 bet to RM180 with effect from Dec 15.

Both companies also told Bursa Malaysia that the special prizes for the 4Digit Big permutation variant would be revised accordingly with effect from the same date.

MPHB and Berjaya Sports Toto also said the revised prize structure was expected to have a positive impact on their respective earnings.

In another announcement to Bursa, Berjaya Assets Bhd said its subsidiary, Natural Avenue Sdn Bhd, had also received approval to revise the starter prizes for its 1+3 Digit Big Game from RM200 per RM1 bet to RM180.- by Chua Sue-Ann