INVESTMENT HIGHLIGHTS

• Bursa Malaysia (Bursa) is scheduled to release its 2QFY18 results on 30th July 2018

• ADTV traded increased in the quarter

• 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 RM7.57

2QFY18 earnings are expected to be within our estimates. Bursa is expected to release its 2QFY18 results on 30 July 2018. We expect profits to come in between RM65.0m and RM67.0m, with growth of around +2.3%yoy. We attribute the earnings expansion to stronger ADTV traded for securities market (OMT). Overall, we expect earnings to account circa 52.8% of the full year earnings forecasts.

Higher ADTV traded for securities market (OMT) in 2QFY18. ADTV traded in 2QFY18 has increased to RM2.8b, a growth of +6.1%yoy. The month of May saw the highest ADTV closed at RM3.6b, posted an increase of +22.9%yoy from the same period last year. Notably, subsequent month of June saw ADTV to ease drastically, with average closing below its quarterly mean at RM2.5b. However, it is noted that ADTV in June still posted growth, climbing by +9.5%yoy. In terms of securities trading revenue, we estimated it will come in between RM77.0- RM81.0m for 2QFY18.

Lower contracts traded, but derivative revenue could be higher. Revenue from derivatives trading is expected to record marginal growth, by approximately +2.7%yoy. We attribute this positive variance to strong improvement in FKLI contracts traded, which grew by +38.7%yoy. While the bulk of the contracts traded were composed of FCPO, we noted that FKLI contracts command higher trade fee. In terms of overall contracts traded, it shrunk by -3.5%yoy in 2QFY18.

Impact on earnings. We believe that earnings are still able to meet our full year forecast driven by our expectation of robust securities trading moving forward. All things considered, we maintain our FY18 forecast at this juncture.

Source: MIDF Research - 26 Jul 2018