B-Land’s FY4/11 core net profit came in 11% below our forecast because of weaker-than-expected property earnings. This as well as the 2% pt increase in pool betting duty to 8% on 1 June 2010 and higher losses for its club division more than offset a lower prize payout for B-Toto. The final DPS of 1 sen was another disappointment, being half of our estimate. We are slashing our FY12-13 EPS forecasts for B-Land by 38-42% and downgrading the stock from Hold to SELL. In view of its volatile earnings, we now apply a 10% discount to its asset based SOP value, which reduces our target price from RM1.24 to RM1.11. Potential downside catalysts are 1) the poor results, 2) execution risk for its overseas projects, and 3) continuous losses for its club division.
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