Affin Hwang sees Bursa 3Q net profit at RM48m, reaffirms 'buy' call

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KUALA LUMPUR (Oct 14): Bursa Malaysia Bhd's third quarter net profit could have come in at RM48 million, said Affin Hwang Investment Bank Bhd.

In a note today, Affin Hwang said it forecasted a cumulative net profit of RM140 million for bourse operator and regulator Bursa during the nine months ended 30 September 2014 (9MFY14).

“This is premised on 3QFY14 revenue of RM125.4 million, which is based on the equity and derivatives  trading statistics that have been released,” said Affin Hwang in a note today.

During 2QFY14, Bursa's net profit fell to RM46.85 million from a year earlier. 1HFY14 net profit was lower at RM92 million.
Today, Affin Hwang said it believed that ample domestic liquidity would continue to support market indices despite non government-linked institutional investors staying on the sidelines.

Affin Hwang viewed short-term volatility and corrections in the market as opportunities for domestic funds to reposition themselves in the market.

Affin Hwang reaffirmed its "buy" call on Bursa shares with a target price of RM9.30.

“In fact, the fourth quarter (4Q14) traditionally is robust, owing to window-dressing activities, our market strategist foresees a 2014-end Kuala Lumpur Composite Index (KLCI) target of 1,920, suggesting an upside from the current level of 1,801.38,” said Affin Hwang.

The research house added that other catalysts in 4Q14 included expectations of stronger export numbers, which had driven Affin Hwang's gross domestic product (GDP) forecast to 5.8%.

Potential initial public offerings, which may include 1Malaysia Development Bhd (1MDB)’s power assets, Malakoff Corp Bhd, and Naza TTDI Sdn Bhd, might add stimulus to the market, said Affin Hwang.

“Bursa’s initiative to encourage greater retail investor participation through the launch of interactive investment platform “Bursa Marketplace” on April 29, 2014, if successful, could also be a catalyst,” added Affin Hwang.