BURSA MALAYSIA (HOLD Maintained, FV: RM9.10) Weaker trading revenue for Securities Market in 4Q24

Bursa Malaysia Hold is maintained by AmBank with a fair value revised down slightly to RM9.10/share (from RM9.30/share) due to a reduction in FY25 earnings forecasts by 1.8%, reflecting anticipated lower daily average trading volume (DATV) for its securities market.

The stock’s current price-to-earnings (PE) ratio is 23.3x FY25 forecast, near the 10-year historical average of 24x.

For the first nine months of FY24 (9MFY24), Bursa’s core earnings grew 40.2% year-on-year to RM241 million, driven by a 31% increase in operating revenue. This growth excludes a one-off RM28 million sales and services tax (SST) reversal in 9MFY23. Trading revenues for securities and derivatives rose by 52.9% and 19.8% year-on-year, respectively, while non-trading revenue increased by 11.8%. The cost-to-income ratio held steady at 46%.

Weaker trading revenue

In 3Q24, DATV for equities dipped to RM3.5 billion from RM3.6 billion in 2Q24, with a softer month in September. For 9M24, DATV reached RM3.35 billion, up from RM2.02 billion in 9M23. 4Q24 DATV is expected to remain weak due to geopolitical tensions and uncertainties around the US presidential election, with securities market velocity declining to 43% in 3QFY24 from 45% in 2QFY24.

Bursa is on track to meet its FY24 key performance indicators (KPIs), including a targeted 42 IPOs, up from 35 as of 9MFY24, with no change in guidance for FY24 targets, says AmBank.

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