Research houses positive on Bursa Malaysia after first half results

KUALA LUMPUR: AmInvestment Bank Bhd Research has maintained its "buy" stance on Bursa Malaysia Bhd with a lower fair value of RM9.40 per share from RM10.70 per share previously following the bourse's financial results yesterday.

The research house said Bursa Malaysia's lower net profit of RM89 million in the second quarter of 2021 (2Q21), down by 26.7 per cent quarter-on-quarter (QoQ), was attributed to a decline in securities trading revenue, while trading revenue for derivatives was stable QoQ with sustained average daily contracts traded (ADC).

"The 2Q21 daily average trading value (DATV) for on market trades (OMT) for securities slipped to RM3.8 billion versus RM5.1 billion in 1Q21," it said in a note today.

However, for first half of 2021 (1H21), net profit came in at RM210 million, growing 39.4 per cent year-on-year (yoy), underpinned by stronger securities trading revenue (+41.4 per cent yoy), Bursa Suq Al-Sila' (BSAS) trading revenue (+5.8 per cent yoy) and non-trading revenue, partially offset by lower derivatives trading revenue.

Moving forward, AmInvestment viewed that investor sentiment will be softer in 3Q21 from the continued lockdowns with COVID-19 cases rising further and political uncertainties.

"Nonetheless, investor sentiment is likely to improve, leading to stronger trading activities in the securities market in 4Q21 once herd immunity is achieved through vaccinations," it added.

Meanwhile, MIDF Research also maintained its "buy" stance on Bursa Malaysia with an unchanged target price (TP) of RM8.90 as the interest in trading continues to be robust, especially among retail investors.

"This was despite the market weakness seen in 2Q21. We expect the trading activities momentum will continue in 2H21.

"As such, this should bode well for Bursa Malaysia's performance this year. In addition, Bursa Malaysia is also strengthening its core business such as expanding its product offering and investing in technology," it noted.

Meanwhile CGS-CIMB Research maintained "hold" call on Bursa Malaysia with a lower TP of RM7.48 as it expected the equity ADTV to decline in 2H21, which could lead to lower 2H21 net profit for the company.

"However, we think that its share price would be supported by the attractive dividend yield of 5.5 per cent in financial 2021.

"Although Bursa Malaysia's 1H21 net profit accounted for 56 per cent of our full-year forecast, we regard this as in-line in anticipation of a weaker 2H21 net profit," it added.

As at 10.38 am, Bursa Malaysia rose 21 sen to RM7.81, with 880,600 shares changing hands.

-- BERNAMA