INVESTMENT HIGHLIGHTS

• Bursa Malaysia (Bursa) is scheduled to release its 3QFY17 results on 25th October 2017

• ADV traded in September soared

• We make no changes to our FY18 forecasts at this juncture

• We maintain our NEUTRAL stance with an unchanged TP of RM11.00

3QFY17 earnings are expected to fall within estimates. We understand that Bursa will be releasing its 3QFY17 results on 25 October 2017. We expect bottomline to come in between RM47.0m and RM51.0m, or growth of around +6.6%yoy. The expected earnings expansion will be driven by stronger ADV traded for securities market (OMT) and marginally higher ADC traded in derivatives market. Overall the results are still expected to fall within our estimates.

Higher ADV traded for securities market (OMT) in 3QFY17. ADV traded in 3QFY17 has increased to RM1.9b (+9.0%yoy). We believe the upsurge in ADV was driven by the increase in trading activities among investors identified as foreign. Note that in the week ended 29 September, the net amount offloaded by global investors reached - RM967.3m. Notably, this was the highest weekly attrition recorded since the week ended November 18 last year. On quarterly basis, we observe that the amount offloaded has reached a net total of -RM558.3m in 3QFY17. We believe that these net selling activities were mainly driven by market uncertainties, stemming from ongoing geopolitical tensions.

Impact on earnings. We retain our FY forecasts at this juncture as we expect the impending results to come in line with our estimates.

Recommendation and valuation. Correspondingly, we maintain our

NEUTRAL stance on Bursa with an unchanged TP of RM11.00. Our valuation is based on FY18EPS of 43.4sen pegged to its 5-year historical average of 25x (1- standard deviation below). However, we do not preclude the possibilities of an upward revision to our valuation following the upcoming 3QFY17 results announcement. This is premised on the encouraging growth of ADTV in the month of September, circa +20.0%mom as well as better outlook on the macroeconomic performance for the rest of the year.

Source: MIDF Research - 24 Oct 2017