PETALING JAYA: RGB International Bhd, a leading casino machine supplier, is expected to reap the full benefits of economic recovery as Asian gaming demand picks up.
Rakuten Trade is optimistic of a strong recovery for the group, which posted a narrow profit of RM4.6 million for the financial year ended Dec 31, 2022.
Assistant vice president Lee Chin Hui told FMT Business that RGB would reap more benefit from the border reopening, increasing tourist footfall and rollout of gaming licences by regional governments to boost the economy.
“With 37 years in the Asian gaming industry, RGB has imprinted its strong market share as one of the leading casino gaming machine suppliers to licensed casino operators in nine countries,” she said.
RGB currently has around 4,500 gaming machines operating under technical support and management (TSM), where the machines are under concession on a profit-sharing basis across Asia.
On Sept 21, 2022, RGB’s wholly owned subsidiary RGB Macau secured RM270 million worth of bulk orders from existing customers in the Philippines, which is expected to be delivered in FY2023.
“Together with the TSM segment recovery, we expect a 67.1% growth in revenue for FY2023,” said Lee.
Rakuten forecasts net profit of RM44.2 million for FY2023, and RM48.3 million for FY2024.
“The company has not paid dividends for the past three financial years. However, it aims to declare a 30% dividend payout in FY2023 thus translating to a potential dividend yield of 2.6%/2.9% in FY2023/FY2024,” she added.
State election outcomes not a concern
Earlier this month, RHB Securities Research downgraded the gaming numbers forecast operation (NFO) sector from overweight to neutral.
“Post Kedah’s ban on number forecast operator (NFO) outlets, investors will likely remain on edge over six upcoming state elections, where three states house about one-third of the NFOs’ total outlets,” it said.
Given that RGB is an international gaming machine supplier and concession owner while Sports Toto is a domestic numbers forecast operator, the impact of the upcoming state elections is likely to be minimal on the group.
On the other hand, the NFO segment of the gaming industry is likely to be influenced by the outcomes of elections in Selangor, Penang and Negeri Sembilan.
“These three states make up 35% and 33% of Sports Toto’s and Magnum’s total current outlets and ticket sales,” said RHB.
Given RGB’s large international exposure, particularly in the Philippine market, Lee noted “any negative developments domestically would be mitigated”.
At the close of trade yesterday, RGB’s share price rose half-a-sen or 2.3% to 22.5 sen, giving it a market capitalisation of RM348 million.