Wednesday, 24 August 2016

What's the future for Magnum Berhad?

It was published by The Star newspapers on Friday, 19-August-2016 regarding the loss for Magnum Berhad. The net profit dipped 63% and according to Magnum, it was due to a high payout for Q2 2016. So with such a high payout, what's the future for this particular counter? Would it still be that attractive for investment? You can read the full newspaper article or directly from the link below.

Magnum net profit dips to RM21.84mil in second quarter

PETALING JAYA: Magnum Bhd reported a lower net profit of RM21.84mil for the second quarter ended June 30, 2016 (Q2’16), owing to a lower contribution from the gaming division arising from exceptionally high payouts.

The number forecast operator’s revenue for the quarter amounted to RM625.78mil. In comparison, Magnum recorded a net profit of RM59.83mil on the back of RM647.13mil in revenue during the same period a year ago.

In a filing with Bursa Malaysia, Magnum noted that its gaming division’s sales had declined by RM21.1mil during the quarter, as it continued to face intense competition from illegal operators and weakness in consumer spending.

For Q2’16, the segment reported a pre-tax profit of RM34mil, or a substantial decline from the RM86.5mil achieved the year before.

According to Magnum, several factors have led to lower gaming sales. Among them are increasing activity by illegal operators, weak consumer spending, and the effects of recognising revenue net of the goods and services tax on gaming supply for six months this year compared to three months from April to June a year ago.

Additionally, the relatively low 4D Jackpot prize pool owing to a higher number of Jackpot strikes during the period had also impacted overall sales, it said.

Meanwhile, its investment holding division has returned to the black with a pre-tax profit of RM3.3mil for the quarter, compared with a pre-tax loss of RM2.4mil a year ago.

The improvement was mainly attributed to the fair value gain of quoted investments registered in the quarter, as opposed to a fair value loss position recognised in the previous corresponding quarter.

You could check out the report from Public Investment Bank regarding their views on the Magnum Berhad share below.

Public Investment Bank - Magnum Berhad

The Magnum Berhad shares closed at 2.47 on Thursday, 18-August-2016. As of 23-August-2016, the share price is 2.35 and it's clearly seen that the investors are not too happy with such a huge dip in the profit. There was a report saying that the investors are still willing to stay on with Magnum Berhad as the share price was seen to jump up 2 cents on Monday to close at 2.40. This is a share that I'll be monitoring and hopefully in the near future, I shall have more news on Magnum Berhad.

Happy Trading!