Mana Cari with 7.5 % interest per year - BTOTO

BToto remains a dividend yield play given its resilient operation backed by stable revenue and cost structure, and a visible capital management policy. Given our lower dividend assumption, we have reduced our DDM derived fair value from RM5.60 to RM4.90 but maintain our BUY recommendation. The stock’s current valuations remain undemanding, with an implied average sustainable gross dividend yield of 7.5%.
Dividend to normalise. As expected, no interim dividend was declared in the current quarter as the 1Q10 dividend of 19 sen/share was declared in advance in the previous quarter, representing a net payout ratio of 237.6%. We have tweaked downwards our FY10 and FY11 dividend assumptions to reflect a more conservative gross dividend of 31 sen/share and 35 sen/share respectively, representing a minimum net dividend payout ratio of 75%. Given BJtoto’s sizeable 1QFY10 dividend payout of 19 sen/share, we expect
the subsequent quarter’s dividend payouts to normalise to roughly 4sen-to-6sen/quarter.