BURSA (1818) - Bursa Malaysia 1QFY17 profit above expectations
Bursa Malaysia Bhd
(April 27, RM10.08)
Reiterate buy call with a target price (TP) of RM10.80: Bursa Malaysia Bhd’s first quarter ended March 31, 2017 (1QFY17) net profit of RM56.6 million (up 13.4% year-on-year [y-o-y] or up 12.9% quarter-on-quarter [q-o-q]) was in line with our expectations, but above consensus by 6.4%.
The key top-line driver was the more robust securities market revenue (including stable fee income and variable securities market clearing fees), which contributed about 74% of 1QFY17 operating revenue.
Underpinning this was the 1QFY17 securities market average daily value of RM2.5 billion (up 24.6% y-o-y or up 31% q-o-q) and an effective clearing fee rate of 2.32 basis points (bps), which was 0.1bps higher q-o-q but 0.06bps lower y-o-y.
The 1QFY17 operating margin for the securities market was higher at 81% versus 77.6% in 1QFY16 and 79% in 4QFY16.
On the derivatives market, 1QFY17 revenues came in at RM29.3 million (down 2.8% y-o-y but up 22% q-o-q), with an operating margin of about 51% (down from 59.2% in 4QFY16 and 54.7% in 1QFY16) due to a sharper increase in futures crude palm oil trades (up 20% y-o-y) while the higher-fee based futures KLCI (FKLI) trades came down 27% y-o-y.
Total contracts traded were 3.79 million for 1QFY17, which was up 9.1% y-o-y and 10.5% q-o-q while on an average daily contracts basis, it was at 62,076 (+9% y-o-y, +12.3% q-o-q).
We reiterate our “buy” rating on Bursa, with a 12-month TP of RM10.80, based on a financial year ending Dec 31, 2017 price-earnings ratio (PER) of 25.8 times (past 10-year average forward PER).
We leave our forecasts unchanged. Key catalysts for Bursa include the shift in funds from the bond market to equities, recovery in global economic data and corporate earnings, a stronger pipeline of initial public offerings in 2017 (more than RM20 billion), corporate exercises, a recovery in the commodity cycle and sustainable sentiment to the run-up of the upcoming general election.
Key risks to our call are reversal in trading sentiment and rising geopolitical risks. — Affin Hwang Capital, April 27
BURSA (1818) - Bursa Malaysia 1QFY17 profit above expectations
http://www.theedgemarkets.com/article/bursa-1qfy17-profit-above-expectations
