The number forecast operators (NFOs) like Magnum have been on a steady recovery since the full lifting of COVID-19 restrictions in FY22. There is potential for Magnum’s revenue to return to its pre-pandemic level, which reached a high of RM2.7bil in 2019.

Additionally, a favourable High Court ruling in July overturning Kedah’s ban on NFO outlets offers much-needed clarity and assurance about their operation, especially in opposition-controlled states.

Lady luck also seems to be smiling on Magnum as there was no gaming tax or sales & services tax (SST) rate hikes in the recent Budget 2025. Those are positive factors for NFOs in Malaysia.

Interestingly, U-Mobile winning the 2nd 5G network bid has a positive spillover on Magnum. Recall that Magnum has a hidden gem in the form of its 6.3% stake in cellphone-network operator U Mobile.

U Mobile hogged the limelight recently after it was selected by MCMC to lead the implementation of the nation’s second 5G network. This win has significantly boosted the appeal of U Mobile’s upcoming IPO, which aims to raise new capital for its network rollout. As such, monetisation of U Mobile stake a key catalyst for Magnum.

Based on consensus forecast, Magnum currently trades at an undemanding valuation of 10.7x FY24 PE and offers 5.5% net dividend yield. U Mobile’s 5G win will likely add credibility to news report suggesting a target IPO valuation of RM9bil-RM10bil, therefore valuing Magnum’s 6.3%-stake at about RM567mil-RM630mil.