KUALA LUMPUR (Jan 3): CGS-CIMB Securities said the Kedah numbers forecast operators (NFO) outlet closures was a negative for sentiment.

In a note on Tuesday (Jan 3), the research house maintained its “add” rating on Magnum Bhd at RM1.29 with a lower target price (TP) of RM1.70 (from RM1.80) after Kedah has ordered the closure of all NFO outlets in the state from Jan 1, 2023 onwards following its prior directive in November 2021.

The research house cut Magnum’s FY2023-24 core EPS by 5% to reflect this and the reduction in the number of special draws from 11 to 8 per annum (p.a.) from 2023.

“This news may exacerbate already weak sentiment on the stock (top NFO pick), at least in the near term.

“We reiterate 'add' with lower RM1.70 TP,” it said.

Meanwhile, CGS-CIMB maintained its “add” rating on Sports Toto Bhd at RM1.62 with a lower target price of RM1.90 (from RM2) and cut Sports Toto’s FY2023-25 core EPS by 2-5% to reflect this and the reduction in the number of special draws from 11 to 8 p.a. from CY2023.

“We believe this news will further dent already weak sentiment on the stock, at least in the near term.

“We reiterate 'add' with a lower TP of RM1.90,” it said.