KUALA LUMPUR (May 23): Hong Leong Investment Bank (HLIB) Research has upgraded its rating on Bursa Malaysia Bhd (KL:BURSA) to “buy” at RM8.30 with a higher target price of RM9.15 (from RM7.36), and said it sees the bourse's FY2024 average daily volume (ADV) hitting a post-pandemic high of RM2.7 billion (+33% year-on-year).

In a note on Thursday, the research house said this will be supported by (i) upbeat domestic macro fundamentals (eg 1Q2024 GDP surprised on the upside), (ii) low foreign shareholding, which suggests ample room for foreign liquidity to pour in, (iii) further risk appetite boost in 4Q2024 from the US Fed’s eventual pivot and (iv) potential fund redeployment post-Malaysia Airports Holdings Bhd's (KL:AIRPORT) privatisation.

HLIB said Bursa’s non-trading revenue is also now on a larger base, helping to smoothen the cyclicality from ADV and average daily contacts.

“With a larger NTR base, this helps Bursa to better smoothen the cyclicality from ADV and ADC — a merit which has perhaps been underappreciated by investors. Management targets to grow NTR by 5-7% this year, which we reckon is doable (our forecast is at 5.4%; 1Q24: 12.1%).

“From a different valuation perspective, its MC/ADV ratio looks compelling at -1SD,” it said.