HLIB sees Bursa Malaysia’s 1Q earnings rising 34% y-o-y

HLIB sees Bursa Malaysia’s 1Q earnings rising 34% y-o-y

KUALA LUMPUR (April 19): Hong Leong Investment Bank (HLIB) expects Bursa Malaysia Bhd’s earnings for the first quarter to rise 34% year-on-year to RM75 million, amid the expectation of higher securities average daily value (ADV) and derivatives average daily contract (ADC).

Earnings for the first quarter ended March 31, 2024 (1Q) accounted for 30%/29% of the research house/consensus forecast for the financial year ending Dec 31, 2024 (FY2024), it said in a note to clients on Friday. Bursa is slated to release its 1Q results on April 30.

Given Bursa’s solid ADV performance year-to-date, amounting to RM2.9 billion, the research house has upped its earnings projections for FY2024 by 3% and for FY2025 by 6%. As a result, the target price has been raised from RM7.12 to RM7.36.

“Although ADV is set to rebound strongly this year, we reckon that this has been priced in seeing that Bursa’s rolling PE is +1.9SD above the 5Y mean and its PE [price-earnings] gap versus regional peers has widened to +1.9SD (ie currently at a premium of +6.6% vs the 5Y average discount of -24.5%),” said HLIB.

“We expect some sequential softening in ADV for 2Q-3Q2024 premised on the [US] Fed’s rate pivot being pushed back to 4Q2024 — hence delaying risk appetite for EM [emerging markets] including Malaysia,” it added.

For FY2023, Bursa Malaysia’s net profit increased 11.4% to RM252.38 million from RM226.57 million a year earlier, while revenue rose 2.2% to RM616.49 million from RM603.25 million previously.

As of 9.15am on Friday, Bursa’s share price fell three sen or 0.40% to RM7.43, giving it a market capitalisation of RM6.01 billion.