Bursa Malaysia recorded 4Q12 securities market ADT of RM1.42b. This brings 2012 ADT to  RM1.59b,  which  is  5.5%  lower  YoY.  Whilst  this  is  unexciting,  we  look  forward  to  a stronger 2013 ADT. We see the upcoming Malaysia General Elections to be a positive for the equities market ADT. We assume 2013 securities market ADT of RM1.99b. Hence, we remain  positive  on  Bursa  Malaysia  and  maintain  our  BUY  recommendation.  Our  target price  of  RM6.81  is  derived  from  22x  2013  EPS,  which  is  minus  one  standard  deviation from the historical average of 31x. Including dividend yield of 4%, shareholders can expect a 12-month total gain of 10%.

Securities  market  ADT  could  be  boosted  by  upcoming  General  Elections.  The previous two General Elections Polling Day were in Mar 2004 and Mar 2008, and ADT in 1Q04 and 1Q08 were sharply stronger than that for CY2004 and CY2008 respectively. The ratio  of  1QCY  ADT  over  12-month  ADT  were  1.49  for  2004  and  1.61  for  2008,  which  is higher than the 1.16x average from 2004 till 2012. This suggests that ADT picks up during the  General  Elections  period  before  slowing  off  in  the  remaining  months  of  the  year. We therefore see scope for Bursa Malaysia securities ADT to gain over the next few months.

4Q12  derivatives  business  did  well,  and  the  outlook  is  positive.  9M12  derivatives market  average  daily  contracts  (ADC)  was  up  10%  YoY  to  38k  contracts,  with  volatility driving  the  trading  of  crude  palm  oil  futures.    4Q12  derivatives  market  ADC  was  44k,  up 5% QoQ and an improvement over 9M12's level. We expect to see further strength in this space  going  forward,  with  CPO  futures  trading  volume  to  benefit  from  likely  strength  in CPO prices.

We forecast 13% net profit growth for 2013, which could increase investors' interest in the stock. Maintain BUY.

Source: OSK