KUALA LUMPUR (Sept 5): Hong Leong Investment Bank (HLIB) Research has maintained its “buy” rating on Sports Toto Bhd with a target price of RM1.79 and said at RM1.51, the stock is trading at an undemanding 9.4 times financial year 2023 (FY2023) price-earnings (P/E) — a discount of 46.8% against five-year average of 17.7 times and 5% against Magnum Bhd's FY2024 P/E of 9.9 times — along with an attractive 7.9% dividend yield.

In a technical tracker on Tuesday, the research house said that under the current market volatility with an increasing risk of recession, the stock will stand out due to its stable earnings profile supported by its resilient business segments.

“The anticipated return of foreign labour punters, following the reopening of international borders is expected to drive a gradual uptick in ticket sales, which is currently hovering at circa 80% to 90% of pre-pandemic levels.

“Notably, even with ticket sales not fully recovered to pre-pandemic levels, Sports Toto achieved record-high annual revenue, largely attributed to a strong performance from HR Owen in 4QFY2023 (fourth quarter of FY2023).

“Technically, Sports Toto is pending for an ascending triangle breakout. A successful breakout above RM1.55 hurdle will signal a new up leg and spur the price toward RM1.59-1.67-1.73. Cut lost at RM1.39,” it said.