Maintain NEUTRAL. Trading activities was strong FY24, driven by “risk-on” mode sentiment from expectation of US Fed rate cuts. However, we observed that trading activities have moderated since the election of President Trump in Nov-24. Following from this, we expect an increase in volatility, and equity market valuation to remain relatively stagnant. Nevertheless, we expect that the US Fed will continue its monetary policy shift and sentiment will improve. Despite this, we believe that the positives have been largely priced in, with current valuations slightly stretched. Hence, we are maintaining our NEUTRAL recommendation with an unchanged TP to RM8.80 based on pegging FY25 EPS to PER of 23.5x which is its 2-year average PER.

Within expectations. Bursa Malaysia Bhd (Bursa) ended the year with a strong earnings growth of +22.9%. This was within our and consensus’ expectation at 102% and 104% of respective full year estimate.

Revenue lost momentum in 4QFY24. Total revenue in 4QFY24 declined - 12.0%qoq but was much higher on year-on-year basis with +18.7%yoy growth. Again, this was due to strong securities trading revenue which increased +15.6%yoy in 4QFY24 and +43.1%yoy for FY24. Derivatives trading was also supportive with +27.0%yoy in FY24.

Higher trading activities. Average Daily Value (ADV) (OMT) in FY24 rose +53.2%yoy to RM3.15b (9MFY24: +66.3%yoy to RM3.36b).

Lower CIR due to higher revenue. OPEX grew +25.0%yoy to RM373.5m with the main driver being higher staff costs (+14.9yoy). There was also one-off reversal of provision in FY23 which contributed to the higher OPEX in FY24. Nevertheless, with the better revenue, cost-to-income ratio (CIR) was still below the 50% mark, at 47.6%, -0.8ppt better than in FY23.

Exceed FY24 IPO target, ambitious FY25 target. Cumulatively, Bursa saw 55 IPOs in FY24 due to a surge of 20 IPOs in 4QFY24. This exceeded the 42 target listings for FY24. Up to end FY24, the IPOs raised a total RM7.44b, +108%yoy higher. For FY25, it is targeting an ambitious target of 60 listings.

Guiding for lower PBT in FY25. For FY25, Bursa is targeting a marginally lower PBT of between RM369m and RM408m. We believe that this is fair given the current market conditions and expectation of volatile sentiments. The PBT target is within our expectation, hence, we make no adjustment to our earnings forecast for FY25.

Source: MIDF Research - 28 Jan 2025