PETALING JAYA: Number forecast operator (NFO) Sports Toto Bhd’s UK luxury car distribution unit HR Owen plc’s sales outlook is seen to weigh on the company in the coming quarters due to lower British consumer sentiment.

Analysts expect Sports Toto’s NFO business to continue supporting the company’s financial performance, with HLIB Research noting that the second-half of the financial year ending June 30, 2025 (FY25) should deliver stronger results than the first-half.

This would be driven primarily by robust performance in the third quarter ending March 31 (3QFY25) fuelled by the record-breaking 6/58 jackpot prize of RM121.7mil and the seasonality boost from the Chinese New Year festivities.

The research house, which has maintained a “hold” on the stock but raised its target price to RM1.64 per share, said luxury car sales volume remains under pressure in the UK, similar to the first-half amid high inflation and the underperformance of several recent new models.

“We anticipate the NFO segment to continue doing well anchored by the recent resurgence in interests following its record-high jackpot. However, HR Owen may continue to be challenging given the soft consumer sentiment and the less favourable product mix,” it said.

“The weaker revenue from HR Owen was dragged by unfavourable forex effect (ringgit strength), despite the car distributor experienced a growth of 2.4% in pound sterling as a result of positive demand within the used car sector. In tandem with lower revenue, core profit after tax and minority interests shrank slightly by 2.8%,” it added.

Sports Toto released 2QFY25 results last week that were below market consensus despite net profit doubling compared to the same quarter from a year ago. The company declared a second interim dividend of two sen per share to be payable on April 19, 2025.

TA Securities Holdings Bhd, which reiterated its “buy” recommendation on the stock with a target price of RM1.76 for the shares, said HR Owen’s operations would remain challenging for 2025 owing to the UK’s weak macroeconomic outlook and the uncertainties surrounding US tariffs’ impact on the global economy.

It pointed out that despite the increase in 6/58 sales, the sales did not cannibalise the sales of other lotto and four-digit games. Sports Toto’s management also shared that daily sales have returned to pre-Covid-19 levels despite the 6/58 jackpot having been reduced to RM20.7mil following the historic payout last month.

Maintaining FY25 and FY26 earnings projections, it said the decline in cumulative core profit for the first-half of FY25 was due to higher contribution from NFO operations and lower losses from HR Owen in 2QFY25.