NFO - Exploring potential measures to offset higher betting duties. We gather that management is still exploring various steps via the reduction of the prize payout to mitigate the recent 2%-pt hike in pool betting duties. This could involve either:
1) a direct reduction in individual prizes;
2) reduction in the total number of consolation prizes; and/or
3) a combination thereof.
Assuming there is no change in sales volumes, we estimate a 2%- pt reduction in prize payout should allow Tanjong to fully offset the impact of the higher betting duties. In terms of the impact of sales/draw to the group’s earnings, we estimate that every 1%-pt decline in sales/draw volume growth would impact net profit by just 0.2%. At this juncture, we have not imputed any reduction in our prize payout assumptions, pending approval from the Government.
Tanjong plc Berhad : Gaming Under Pressure - 16/7/2010
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