INVESTMENT HIGHLIGHTS

• Bursa Malaysia (Bursa) is expected to release its 1QFY18 results on 25th April 2018

• ADTV traded in January soared

• We make no changes to our FY18 and FY19 forecasts, as we expect earnings to be in-line with expectation

• We maintain our NEUTRAL stance with an unchanged TP of RM7.50

1QFY18 earnings are expected to come within estimates. It is expected that Bursa will be releasing its 1QFY18 results on 25 April 2018. We expect profits to come in between RM61.0m and RM63.0m, with growth of circa +10.5%yoy from the same period last year. The expected earnings expansion will be driven by stronger ADTV traded for securities market (OMT). Overall, we expect earnings to fall within our estimates, accounting for circa 26.1% of the full year forecasts.

Higher ADTV traded for securities market (OMT) in 1QFY18. ADTV traded in 1QFY18 has increased to RM2.7b, a growth of +15.8%yoy. We attribute this upsurge to the increase in trading activities among investors identified as foreign. The month of January saw the highest ADTV closed at RM3.2b, an increase of +84.3%yoy. Notably, subsequent months of February and March saw ADTV eased gradually, reverting to its quarterly mean of RM2.7b. However, it is worth to note that ADTV in February remained in the growth trajectory, climbing by +10.9%yoy. In terms of securities trading revenue, we estimated it will come in between RM68.0-72.0m for 1QFY18.

Derivatives revenue dwindled down by lower contracts traded. Revenue from derivatives trading is expected to record slight contraction, by approximately -7.0%yoy. We attribute this negative variance to reduction in overall contracts traded in the derivatives market, which dropped by -14.2%yoy. This was largely driven by the negative trend of FCPO trades, which decreased by approximately - 16.0%yoy.

Impact on earnings. Despite the slight contraction in derivatives business, we foresee that earnings will still come in within our full year estimates driven by the increase in securities trading. Taking this into account, we maintain our FY18 forecast at this juncture.

Valuation. Correspondingly, we maintain our NEUTRAL stance on Bursa with an unchanged TP of RM7.50. Our valuation is based on FY18EPS of 29.5sen (adjusted following bonus shares issuance) pegged to PER of 25x. For 2018, we estimate ADTV to average at RM2.42b, with growth expectation of +4.6%yoy. Meanwhile for 2019, we expect ADTV to average at RM2.66b, an increase of +9.9%yoy respectively.

Source: MIDF Research - 23 Apr 2018