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Bursa Malaysia - 1818
Bloomberg - BURSA:MK
Webpage - https://www.bursamalaysia.com/
Yahoo - 1818.kl

Sector            Financial Services
Sub Sector    : Others Financials
Focus            : Exchange

Company Profile

Bursa Malaysia Berhad (BURSA) is an exchange holding company. Bursa Malaysia is home of the largest Public listed companies in ASEAN. BURSA operated in four segments as follows


i) Securities Market

This segment mainly comprises the provision and operation of listing, trading, clearing, depository service and provision and dissemination of information relating to equities security quoted on the security exchange.


ii) Derivative Market

This segment market mainly comprised the provision and operation of trading, clearing, depository services and provision and dissemination of information relating to derivative products quoted on derivation exchange.

Crude Palm Oil Futures price which trade in Bursa Derivative exchange is used as the benchmark for globally crude palm oil price. 


iii) Exchange Holding Business

This segment function as investment holding company


iv) Other

This segment comprise of Shariah compliant commodity trading platform, a reporting platform for bond traders and the provision of exchange for the offshore market


Income Statement



31 Dec 2020

31 Dec 2019

31 Dec 2018

31 Dec 2017

31 Dec  2016

Operating cost

272,170,000

224,770,000

215110,000

216,200,000

202,120,000

Effective Tax Rate

25.44 %

25.89 %

25.17 %

24.74 %

25.10 %

OMT and DBT Average Daily Volume

9,130,000,000

2,677,000,000

2,647,000,000

2,639,000,000

1,763,000,000

Correlation between Revenue and Average Daily Volume 

0.99






BURSA revenue mainly depends on the average daily volume from 2016 to 2020 correlation between revenue and the average daily volume is 0.99. From Q1 2017 to Q4 2020 correlation between the two is 0.98.


BURSA has fixed operating cost, aside Q4 2020 which had operating cost of RM 85,650,000 BURSA had an average operating cost of RM 56,147,800 from Q1 2017 to Q3 2020. BURSA had an average effective tax rate of 25.27 % from 2016 to 2020. Q4 2020 impose higher operating costs due to higher professional fee and one off SST provision.


Most BURSA revenue from securities market segment, 84 % in 2020. BURSA revenue from the securities market increased from 73 % in 2016 to 84 % in 2020.


Balance Sheet




31 Dec 2020

31 Dec 2019

31 Dec 2018

31 Dec 2017

31 Dec  2016

Cash and Short Term Investment

2,658,830,000

1,786,910,000

1,763,520,000

1,594,400,000

1,847,840,000

Trade Payable

2,068,710,000

1,395,880,000

1,375,960,000

1,166,020,000

1,378,600,000

Intangibles

33,330,000

39,940,000

40,350,000

40,840,000

47,110,000

Current Ratio

1.20

1.21

1.20

1.25

1.26

Cash / Trade Payable

1.29

1.28

1.28

1.37

1.34


BURSA trade payables comprise derivative trading margins, equity margin and security deposits from Clearing Participants of Bursa Malaysia. An increase in trade payable show an open interest in bursa derivatives and equity. BURSA Cash / Trade Payable ratio is more than one which means BURSA is capable of paying all trade payable if the open interest had decreased.


BURSA had a current ratio of more than one from 2016 to 2020. BURSA current assets is lower than current liabilities. BURSA intangibles had decreased from RM 47,110,000 in 2016 to RM 33,330,000 in 2020.


Cash Flow



31 Dec 2020

31 Dec 2019

31 Dec 2018

31 Dec 2017

31 Dec  2016

Cash Flow from Operation

417,240,000

186,630,000

214,290,000

246,110,000

201,930,000

Cash Flow from Investing

-90,510,000

8,700,000

-12,800,000

80,660,000

-57,900,000

Cash Flow from Financial

-225,620,000

-177,750,000

-281,730,000

-292,330,000

-194,190,000

Capital Expenditure

-16,220,000

-20,450,000

-12,960,000

-9,120,000

-10,880,000

Free Cash Flow

401,000,000

166,180,000

201,330,000

236,990,000

191,050,000


BURSA had significant cash flow from operation and free cash flow from 2016 to 2020. BURSA had high cash flow from financial activities compared to cash flow from operating activities from year 2016 to 2019. Most of cash flow from financial activities are for payment of dividends to the shareholders. Since BURSA  does not required much expansion most of the cash from operating activities would distributed back to the shareholders.


Dividend


BURSA had pay dividends for more than 10 years without failure. Over the years, BURSA had announce dividends at least twice a year.



31 Dec 2020

31 Dec 2019

31 Dec 2018

31 Dec 2017

31 Dec  2016

Dividend 

0.51

0.208

0.336

0.535

0.34

Dividend Payout

109.20%

88.66%

117.56 %

187.17 %

134.77 %

Dividend Yield 

6.20 %

3.45 %

4.96 %

8.08 %

5.96 %

Malaysia 10 years Bond

2.68 %

3.33 %

4.01 %

3.94 %

4.24 %


Aside from 2019, BURSA has a dividend payout ratio of more than 100 %. Unlike most companies which require retained earnings for future investment, BURSA is an exchange holding company that does not need much CAPEX investment.


BURSA dividend yield is higher than Malaysia 10 years Bond for the past 5 years.


Per Share Analysis



31 Dec 2020

31 Dec 2019

31 Dec 2018

31 Dec 2017

31 Dec  2016

Outstanding Share 

808,500,000

807,960,000

806,830,000

805,380,000

803,320,000

Outstanding Share (Dilute)

808,800,000

809,420,000

809,360,000

807,960,000

807,808,000

Price (closing 31 December)

8.228

6.037

6.781

6.62

5.707

Book Value per share

1.07

0.89

1.03

1.00

1.02

EPS (Dilute)

0.467

0,234

0.285

0.285

0.251

P/E

17.62

25.78

23.80

23.23

22.73

P/BV

7.67

6.78

6.57

6.61

5.60


For year 2020, BURSA had low P/E as compared to the past 4 year average of 23.88. On average BURSA price is about 6.65 times its book value. In 2020 BURSA P/BV is higher than the average.


Research Report


Investment House

Date

Target Price

MAYBANK INVESTMENT BANK BERHAD

02 February 2021

RM 10.00

HONG LEONG INVESTMENT BANK BERHAD

03 February 2021

RM 11.46

MIDF AMANAH INVESTMENT BANK BERHAD

03 February 2021

RM 8.90

KENANGA INVESTMENT BANK

03 February 2021

RM 9.65

AFFIN HWANG CAPITAL

03 February 2021

RM 10.90

AMINVESTMENT BANK BERHAD

03 February 2021

RM 10.30

Average Price Target


RM 10.20


Average analyst target price is RM 10.20. 


Technical Analysis

Since September 2020, BURSA Daily Chart shows the price is trading around RM 8 and RM 9. Besides that BURSA had traded above 200 moving average since May 2020.



Weekly chart shows symmetrical triangle converge into RM 9.00. From both the daily chart and weekly chart RM 9.00 is providing a strong resistance level for BURSA.


Peer Analysis




Bursa

HKEx

SGX

ASX

TMX

EURONEXT

P/E

19.42

53.87

21.58

26.23

24.74

`19.70

Dividend Yield

4.74 %

1.67 %

3.15 %

3.43 %

2.3 %

1.51 %




http://ivkls.blogspot.com/2021/03/stock-review-bursa-1818-bursa-malaysia.html


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