By Khairul Khalid
Berjaya Sports Toto (B-Toto) decision to abort listing Sports Toto Malaysia Berhad (STM) as a business Trust on the Singapore Stock Exchange (SGX) was lauded by local analysts as a good move.
“The exercise is not value-accretive to the group. Hence, we are positive on the cancellation. We have always been apprehensive on the deal, deeming the risk of capital loss to shareholders holding STM-Trust units higher than the gains from the special dividend and 8% yield promised from the listing of STM-Trust,” said a Public Investment Bank PIB research report.
B-Toto cited challenging market conditions and the poor performances of listed yield stocks such as REITs and other business trusts in Singapore as key factors in its cancellation.
PIB’s analysts concurred with this rationale by stating that most business trusts in Singapore have performed poorly post-listing, with average returns of -29% from IPO (initial Public Offering) prices despite relatively high yields.
Analysts from TA Securities also echoed the sentiment.
“The business trust performance in Singapore has deteriorated recently with the implied dividend yield increased to 7.9% as compared to 7.4% in Sep-13,” said a TA Securities research report while noting that price performance and dividend yield are inversely related.
PIB rates B-Toto as “Outperform” with a target price of RM4.54 from its current price of RM4.00, an expected return of 13.5%.
At midday trading today, BJToto was up 5 sen to RM4.05 at a market capitalisation of RM5.39 billion.
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