- We reaffirm our BUY rating on Bursa Malaysia Bhd with a higher fair value of RM9.80/share (from RM9.00/share previously) as we roll forward our base year to FY14F. We continue to peg our fair value to an unchanged fair PE of 26x.

- Bursa delivered a net profit of RM46mil for 3QFY13, extending its 9MFY13 earnings to RM139mil (+21% YoY). This was in line with ours and market’s full year estimates of RM181mil.

- Investor interest in the local bourse has remained relatively strong YTD. Average daily traded value (ADTV) for 9MFY13 showed a YoY improvement of 20% to RM2.1bil as domestic and foreign trade participation grew by 19% and 39%, respectively. Velocity is currently at 32%, up by 7% YoY.

- However, ADTV slipped by 13% QoQ to RM2.1bil in 3QFY13 from RM2.4bil. That said, we are not too concerned as 2QFY13’s ADTV had jumped by 40% QoQ and 58% YoY following the removal of the election overhang. ADTV is now hovering at levels last seen in early-FY11 and we are confident of Bursa achieving our FY13 ADTV forecast of RM1.9bil.

- Outlook for its derivatives business remains rosy, supported by expectations of greater volatility in the FBM KLCI and commodities markets as well as the introduction of new products (e.g. gold futures on Oct 7). 9MFY13 average daily contracts traded (ADC) were up by an encouraging 16% YoY.

- In the last quarter, open interest for all its products hit another record high (July 26: 258,001) while QoQ ADC picked up by 10% to reach 45,700 contracts, driven by growth in FCPO trades (+18% QoQ). FCPO contracts make up 75% of total contracts traded.

- The overall robust trading volumes in both markets bumped up Bursa’s 9MFY13 trading revenue by 21%. Coupled with higher stable income (9MFY13: +4% YoY), total operating revenue recorded a 9MFY13 growth of 14%.

- This had more than outweigh the 6% rise in its operating expenses, which we mainly attribute to higher staff costs as more key appointments were made. The group’s 9MFY13 EBITDA margins expanded by 3ppts YoY.

- As usual, no dividends were announced this quarter. A 16 sen/share interim dividend and a 20 sen/share special dividend were paid out on Aug 15. The group remains financially sound and has a net cash of RM374mil as at end-Sept 2013. We expect a final dividend to be declared in 4QFY13.

- No change to our earnings forecasts for now. Although the payment of the special dividend marks the removal of a rerating catalyst for the group, we believe that the delay in QE3 tapering will lend support to the emerging markets, including Malaysia.

Source: AmeSecurities