MPHB ... Sept09

MULTI-PURPOSE HOLDINGS' 51% unit, MAGNUM CORP sb, received approval for a new 4-digit (4D) game which will incorporate a jackpot element, slated to be launched at end-2009 said MULTI-PURPOSE in an EXCHANGE filing on Jul 24, 2009.

REDUCING ILLEGAL LOTTERY
OSK RESEARCH said that the move will certainly reduce the market share of illegal operators, and hence benefit all the number forecasting companies in the long run. The illegal numbers market is estimated at 1-to-1.5 times that of the legal NFO market, which was valued at about RM8 bil as at end-2008, according to OSK RESEARCH.

Given that MAGNUM has the single largest market share in the 4D game and that the game is known to be the most popular in the illegal NFO market, they expect this move to give a significant boost to MAGNUM's revenue growth said OSK RESEARCH. The research house also said the Government had always resisted the move to increase gaming taxes as it would only give leeway for illegal operators to gain market share at the expense of the legal operators. Gaming and corporate taxes are estimated to amount to more than RM1.5 bil per annum.

IMPACT ON BERJAYA TOTO
OSK RESEARCH said the approval of the new 4D game for MAGNUM might result in BTOTO facing a marginal slip in its market share, especially for its 4D games but unlikely to cause a drastic drop in BTOTO's revenue growth.

BTOTO's non-4D games have a significantly higher matrix and hence the tendency for a higher jackpot roll-over element, which is the main contributor of the Group's super-normal growth rates the brokerage noted. Currently, BTOTO's 4D games contribute about 70% to 75% of its total NFO revenue.

IMPACT ON TANJONG PLC

OSK reckons that TANJONG plc, which runs its gaming operations via PAN MALAYSIAN POOLS sb may get a share of the action. They believe that the Government may also offer a jackpot element in TANJONG's 3D and potentially, 4D games, so as to be seen as providing a more level playing field for numbers forecasters. HWANGDBS VICKERS RESEARCH says that the policy initiatives are crucial to help players regain lost ground due to the rise in illegal gaming activities. HWANGDBS said that the potential impact on the new games would be minimal on TANJONG's bottom line, especially in the first one to two years. The brokerage believes investors should continue to focus on TANJONG?s strong fundamentals with resilient earnings from both its NFO and power generation businesses, and an attractive net yield of 5%.