BURSA (1818) - CIMB Research lowers Bursa Malaysia target price
BURSA (1818) BURSA MALAYSIA BHD
KUALA LUMPUR: CIMB Equities Research has lowered its target price for Bursa Malaysia from RM10 to RM8.82, but this is still 12.4% above the last traded price of RM7.85.
It said on Tuesday although Bursa’s 9M14 net profit accounted for 76% of its and consensus full-year forecasts, the results were in line since 4Q revenue is seasonally the weakest.
“Though we roll forward our target price to end-2015, it is reduced because we lower our target FY16 price-to-earnings (P/E) from 26.5 times to 21.5 times, on par with the three-year average given the sliding P/E multiple in the past two to three years.
“However, Bursa remains an Add given (1) its above-market dividend yield of 4-5%, and (2) the positive outlook for the derivative business,” it added.
CIMB Research pointed out 3Q14 was not a spectacular quarter for the equity market as market velocity slid from 31% a year ago to 30% in 3Q14. But market capitalisation rose by 10% on-year to RM1.77 trillion, pushing up the 3Q14 average daily trading value (ADTV) by 9.8% on-year to RM2.2bil in 3Q14.
For the same reason, ADTV also advanced by 5.6% on-year to RM2.1bn in 9M14, despite a drop in market velocity from 31% in 9M13 to 30% in 9M14.
On the back of higher ADTV, Bursa’s equity income expanded by 8% on-year to RM180.6m in 9M14. In 9M14, equity trading income made up about half (51.4%) of Bursa’s total revenue.
CIMB Research said average daily contracts for derivative market advanced by a healthy 12% on-year to 49,320 in 9M14, with the increase mainly emanating from CPO futures.
Nonetheless, derivative trading revenue slipped by 4% on-year to RM51.6m, due to lower guarantee and collateral management fees. Overall, derivative trading income accounted for 14.7% of Bursa’s total revenue in 9M14.
“Stay invested in Bursa to capitalise on its above-market dividend yield of 4-5% and the positive outlook for its derivative business. We see the lower derivative income in 9M14 as a hiccup resulting from lower guarantee and collateral management fees.
“We take comfort in the continuous healthy expansion of derivatives trading, which bodes well for Bursa’s earnings from its derivative business,” it said.
http://www.thestar.com.my/Business/Investing/2014/10/21/CIMB-Research-lowers-Bursa-Malaysia-target-price/?style=biz
BURSA (1818) BURSA MALAYSIA BHD
KUALA LUMPUR: CIMB Equities Research has lowered its target price for Bursa Malaysia from RM10 to RM8.82, but this is still 12.4% above the last traded price of RM7.85.
It said on Tuesday although Bursa’s 9M14 net profit accounted for 76% of its and consensus full-year forecasts, the results were in line since 4Q revenue is seasonally the weakest.
“Though we roll forward our target price to end-2015, it is reduced because we lower our target FY16 price-to-earnings (P/E) from 26.5 times to 21.5 times, on par with the three-year average given the sliding P/E multiple in the past two to three years.
“However, Bursa remains an Add given (1) its above-market dividend yield of 4-5%, and (2) the positive outlook for the derivative business,” it added.
CIMB Research pointed out 3Q14 was not a spectacular quarter for the equity market as market velocity slid from 31% a year ago to 30% in 3Q14. But market capitalisation rose by 10% on-year to RM1.77 trillion, pushing up the 3Q14 average daily trading value (ADTV) by 9.8% on-year to RM2.2bil in 3Q14.
For the same reason, ADTV also advanced by 5.6% on-year to RM2.1bn in 9M14, despite a drop in market velocity from 31% in 9M13 to 30% in 9M14.
On the back of higher ADTV, Bursa’s equity income expanded by 8% on-year to RM180.6m in 9M14. In 9M14, equity trading income made up about half (51.4%) of Bursa’s total revenue.
CIMB Research said average daily contracts for derivative market advanced by a healthy 12% on-year to 49,320 in 9M14, with the increase mainly emanating from CPO futures.
Nonetheless, derivative trading revenue slipped by 4% on-year to RM51.6m, due to lower guarantee and collateral management fees. Overall, derivative trading income accounted for 14.7% of Bursa’s total revenue in 9M14.
“Stay invested in Bursa to capitalise on its above-market dividend yield of 4-5% and the positive outlook for its derivative business. We see the lower derivative income in 9M14 as a hiccup resulting from lower guarantee and collateral management fees.
“We take comfort in the continuous healthy expansion of derivatives trading, which bodes well for Bursa’s earnings from its derivative business,” it said.
http://www.thestar.com.my/Business/Investing/2014/10/21/CIMB-Research-lowers-Bursa-Malaysia-target-price/?style=biz
