Published July 28, 2009

MPHB hits 14-month high on government nod for new lottery

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(KUALA LUMPUR) Shares of Multi-Purpose Holdings Bhd, a Malaysian betting and property group, rose to a 14-month high after the company received government approval for a new four-digit lottery game that includes a jackpot element.

In play: Magnum's new game is a 'proactive attempt to address the decline in its sales and market share', CIMB Investment Bank Bhd says in a report yesterday

The stock gained as much as 2.4 per cent, set for the highest level since June 2, 2008, beating the FTSE Bursa Malaysia KLCI Index's 0.2 per cent decline. The company's Magnum Corp unit will introduce the new game in late 2009, it said in a statement last Friday.

Magnum's new game is a 'proactive attempt to address the decline in its sales and market share', CIMB Investment Bank Bhd said in a report yesterday. 'This could be the start of more reforms for the sector in an attempt to claw back some sales lost to the illegals.'

The three Malaysian number-forecast operators will benefit from any government decisions to allow them to offer more games, as their takings have been 'compressed' by illegal gambling where the market may be at least the size of the legal industry, CIMB Investment said. Boosting sales in the legal market would also mean higher tax receipts for the government, it said.

Magnum's new game helps level the playing field, the report said. The company currently offers the fewest games compared with Berjaya Sports Toto Bhd and Tanjong Plc, the report said. Magnum operates one game, Berjaya Sports six games and Tanjong two games, it said.

'We would not be surprised if the government also awards Tanjong a 'new game' soon,' RHB Research Institute Sdn Bhd said in a separate report.

On June 25, Berjaya Sports, the biggest lottery operator, received approval to replace one of its existing lotto games with another called Power Toto 6/55. The new game has a 'much larger matrix' with a minimum guaranteed upfront jackpot of RM3 million (S$1.2 million), it said in a statement then. -- Bloomberg