Friday 29 Mar 2024
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KUALA LUMPUR (Oct 21): Bursa Malaysia Bhd's share price jumped 30 sen or 5% to close at RM6.30 on Friday (Oct 21), valuing the company at RM5.1 billion. At RM6.30, it is the highest closing price this week as investors look ahead to the local bourse operator and regulator's third-quarter financial results announcement scheduled for end-October.

"We tactically upgrade our rating on Bursa from 'sell' to 'buy' with higher TP (target price) of RM7 (from RM5.65) based on [price-earnings ratio of] 24 times mid-FY2022 EPS (earnings per share)," Hong Leong Investment Bank Bhd (HLIB) analyst Jeremy Goh wrote in a note on Friday ahead of Bursa's Oct 31, 2022 announcement on its financial results for the third quarter ended Sept 30, 2022 (3QFY2022).

"Taking cue from 3QFY2022 securities ADV (average daily trading value) of RM1.6 billion (-24% quarter-on-quarter, -44% year-on-year) and derivatives ADC (average daily contract) of 81,000 (+5% q-o-q, +15% y-o-y), we estimate Bursa could post earnings of RM52 million (-12% q-o-q, -35% y-o-y) when results are released on Oct 31," Goh said.

He said that while external headwinds are not likely to dissipate anytime soon, HLIB sees a potential trading opportunity on Bursa shares given the impending 15th general election (GE15), which is scheduled to be held on Nov 19.

"Two out of the past three GEs (i.e. GE14 and GE13) saw ADV surge 55% and 52% over the one-month period after the polls compared to the one-month period before," he said.

Bursa’s share price has a strong 78% monthly correlation to its securities ADV, according to Goh, who maintained HLIB's earnings forecast for Bursa pending Bursa’s 3QFY2022 financial results release on Oct 31.

"With the clock counting down to GE15, we believe investors will start angling on Bursa to ride on the potential near-term ADV surge post polling," he said.

For 2QFY2022, Bursa's net profit fell to RM59.47 million from RM88.97 million a year earlier, according to its filing on July 28, 2022.

Bursa said cumulative 1HFY2022 net profit was lower at RM127.44 million versus RM210.36 million a year earlier.

On Friday, Bursa's stock traded between RM6.02 and RM6.31, with share volume at two million.

Edited ByChong Jin Hun
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