Berjaya Sports Toto- Is it Still any good?

I wrote this posting way back in 2007.

From the write-up I was surely in one euphoric mood.

The sub-prime came in 2007 and we are still in the throes of its aftermath.

So how did Berjaya Sports Toto (BST) shares fared after that?

Let us read what I wrote then.

"This is one great stock. It pays dividends aplenty throughout the year. For a 10 sen share counter, it is truly generous.

Throughout the bull-run, its price hardly advanced, straddling the RM4.60 to RM4.98 range.

When the bears came, it went down to RM3.98. When the tide turned, it was back to its pre-sell-down price of RM 4.78. Majority shareholders buy-ins plus Treasury buybacks propped back the counter. It is as if, nothing has happened!

Yesterday (26 March 2007), it went ex on a 3rd interim dividend of 12.5 %. The price was adjusted to RM4.64 and by 12.00 noon today, it still at its ex-price. Don’t you agree it is one great stock? Expect it to go back to RM4.80 soon.

I believed, in a sense, it is a cornered stock. The free-float in the market appears to conform to regulatory requirements but because of market dynamics, the free-float is no longer there. Many shareholders are actually locking up the stocks as ‘pension money’ and no longer trading on it. They are now merely happy recipients of dividends. As such, the majority owners and the Treasury now have free rein. They will operate to ensure the stock is at a price they are comfortable with. If it fell badly, buying starts and the moment there is increased demand; the shares are sold to meet the appetite of buyers.

If you have bought this stock in 2005, you would have received dividends and capital repayment. Let us worked out how much you would have gained if you had bought the stock at RM4.20 then, some months before the first capital repayment of 50 sen in 2005.

You would have to spend RM4,200 as start-up capital. There were two capital returns and that means you would have received RM1, 000 back. The balance of your investment will now be RM3, 200.

For the years 2005-March 2007 period, you would have received RM235.00 of dividends in 2005; RM510.00 in 2006 and RM250.00 so far for fiscal year ending April 2007. That will come out to about another RM990. We can expect a final dividend of another 12.5 sen before the end of fiscal year 2007. If that comes true then you would have received RM1,115 as dividend for fiscal year April 2006-April 2007. The balance of your initial investment will now be at RM2,085.

Suppose you decide to sell it now, you will get a capital return of RM2, 565. Therefore approximate return to capital from investing two years in Berjaya Sports Toto is about 17% after tax per year. This is great when you compare it with the current low bank interest of 3.7%"

So now let us look what happened to this counter after the write up above. I know it went down to RM4.04 at the beginning of 2009 but now true to the earlier 2007 prediction, it is still at RM4.88.

There was no capital restructuring since the write-up in 2007.

Let us look at how much dividends it has paid in post April 2007,2008 and in the first quarter of 2009.

Since the last dividend payout registered in my earlier post,BST had paid out another RM455.87 in dividend. Deduct this from your initial cash outlay, the actual amount you have actually paid for your 1000 shares will now be only RM1,629.13.

Looking at the current price of RM4.88, you have actually made a capital gain of RM3,250.

Again, just comparing the dividend paid in 2008, it actually comes up to 5.1% if we calculate that at the mean price of BST at RM4.50. This is obviously better than the 2008 bank rate of 3.7%.

You are in the jury, give us your verdict. Is BST a great shares or what?