Bursa Malaysia recorded 2Q12 net profit of RM37.9m, up 6% YoY. This is in line  with  expectations  and  represents  25%  of  our  FY12F.    We  maintain  our assumption  of  FY12  securities  market  ADT  of  RM1.81b,  versus  1H12's RM1.74  b.    The  declared  FY12  interim  dividend  of  13.5  sen  is  also  higher than the 13.0 sen for FY11 interim. Our target price of RM6.81 is derived from 21.5x  FY13  EPS,  which  is  minus-one  standard  deviation  from  the  historical average  of  31.1x.    Whilst  we  are  positive  on  the  new  listings  eg  Felda  and IHH driving ADT, this is largely priced in. Maintain NEUTRAL.

Surge  in  derivatives  trading  revenue.    Trading  revenue  of  RM57.4b  was down 2% YoY. The strength of the derivatives trading revenue (up 22% YoY) was offset by weakness in the securities trading revenue (down 8% YoY). The 2.55m  derivative  contracts  traded  in  2Q12  (up  25%  YoY)  was  mainly  driven by FCPO contracts (up 29% to 1.90m contracts). Consequently, the share of trading revenue from derivatives has risen to 26%, from 2Q11's 21%.

We  are  positive  on  derivatives  revenue  for  2H12.   We  believe  the  recent new  listings  will  lend  support  to  securities  market  ADT.  The  likely  star performer  in  2H12  is  the  derivatives  segment,  with  the  greater  volatility  of CPO  prices  driving  trading  of  FCPO  contracts.  However,  we  believe  these positives are largely factored into current share price.

Source: OSK