Environmental, social, and governance (ESG) considerations have grown in importance as part
of the investment process.
In terms of Berjaya Sports Toto Bhd (BToto), it has come a
long way in this regard.
According to Maybank IB Research, however, there is still an
opportunity for development.
BToto is one of the country's three national number
forecast operators (NFO).
Regarding corporate governance, the research company stated
that, though BToto had advanced large sums of money to associated companies during the Asian
Financial Crisis, those advances had been repaid.
Significant dividends and capital
repayments were also distributed to shareholders.
However, according to Maybank IB,
non-synergistic acquisitions and its relatively high director remuneration are grounds for
The research group claims that the social effect is already well-managed
under current standards.
For example, since 1991, the number of outlets has been
frozen, and the number of regular draws has been limited to three per week. It further said
that NFO establishments are not permitted to give loans to gamblers.
Analysts say the
company is on the mend in business, albeit there are still obstacles to
Over the next two years, its overall revenue per draw day may remain below
pre-Covid-19 levels due to a shift in spending patterns.
Despite the introduction of
delivery services, Affin Hwang Capital Research said in a research last month that the
group's management noted that the recovery after MCO 2.0 is slower than MCO 1.0, as current
revenue is barely 60%-70% pre-pandemic levels.
The decrease in foreign worker inflows
may have also lowered gaming expenditure demand.
Aside from shifting consumer buying
patterns, legal providers like BToto face losing market share to illegitimate
According to Affin Hwang Capital Research, the illegal market is at least
1.5 to two times larger than the legal market.
Apart from convenience, the
underground market's most significant draw is its higher pay, which is currently 28% greater
than that of licenced businesses, according to the report.
NFO players may face more
impoverished first quarter 2021 results due to the one-month hit resulting from the MCO 2.0,
which saw NFO outlets in all states except Sarawak shut down.
Analysts believe that
enforcement against illegitimate operators will be necessary to increasing ticket sales in
the future. At the same time, any substitute for the cancelled drawings during the MCO 1.0
period will bring an earnings boost.