Investment Highlights

• We maintain our BUY recommendation on Bursa Malaysia (Bursa) with an unchanged fair value of RM10.70/share. We continue to peg the stock to FY22 PER of 26x, in line with the average of listed stock exchanges regionally.

• Bursa 1Q21 net profit of RM121mil (+15.8% QoQ; +87.5% YoY) came in slightly above our expectation of RM116mil. This was on the back of higher-thanprojected stable revenue and lower operating expenses. We deemed the 1Q21 net profit, which accounted for 33.0% of our estimate, to be within expectation. Against consensus projection, it made up 36.1% of street numbers.

• 1Q21 saw higher operating revenue of RM228mil (+56.7% YoY) underpinned by stronger securities trading revenue (+72.8% YoY), BSAS trading revenue (+0.5% YoY) and improved stable revenue (listing, depository and subscription fees for market data).

• In 1Q21, DATV (of on-market transactions) for equities continued to be robust at RM5.1bil vs. 4Q20 and 1Q20’s RM4.8bil and RM2.5bil respectively. DATV of domestic institutions, retail and foreign institutions climbed to RM2.2bil, RM2.0bil and RM0.8bil respectively. Retail investors’ DATV remained high with YTD net buy position of RM5.4bil. The number of retail investors’ CDS accounts surged 114% YoY to 85,699 in 1Q21.

• On a monthly basis, DATV for Jan 2021, Feb 2021 and Mar 2021 was RM5.0bil, RM5.2bil and RM5.0bil respectively.

• Trades from retail investors accounted for 40.0% of the DATV while that from institutions made up the remaining 60.0%.

• The economic recovery remains uneven. Hence, volatility is likely to still persist in the market though it is not as high as the previous year. This, coupled with the extension of the temporary restrictions on the RSS and PDT short sale, are envisaged to be supportive of trading in securities.

• March 2021 saw lower outflow in foreign funds from the securities market of RM34mil vs. -RM835mil and - RM867mil in Jan 2021 and Feb 2021 respectively.

• The number of new listings were 6 in 1Q21 vs. 7 in 1Q20. Under the Pemerkasa stimulus package, announced on 17 March 2021, a 12-month waiver of listing fees will be granted to companies seeking IPO on the Main, ACE and LEAP Markets. This is expected to further attract more companies to list on the local market.

• In terms of derivatives trading, the average total contracts traded fell to 80,338 contracts in 1Q21 vs. 85,578 in 1Q20. The decline was due to lower average daily contracts (ADC) traded for FCPO and FKLI at 67,245 and 12,745 respectively.

• Opex in 1Q21 rose by 9.2% YoY largely contributed by provisions of variable costs for employees and the continuation to provide for the SST on digital services of RM3.2mil. Recall in 4Q20, Bursa booked a conservative RM13.6mil in provisions for the potential tax charges on digital services after the recent change in the scope of the SST. This was despite clarifications still being sought from tax authorities on the matter.

• Foreign ownership of the securities market slipped to at 20.3% in Mar 2021 vs. 20.7% in Dec 2020 while the stock’s foreign ownership was 19.8%.

Source: AmInvest Research - 28 Apr 2021