We maintain NEUTRAL and a MYR9.00 TP (3% upside) on Bursa Malaysia following its results release. Whilst there were mid single-digit YoY percentage declines in both securities and derivatives volumes, we have assumed stronger numbers for subsequent quarters, with more CPO futures trading (77% of derivatives volume share) expected due to theeffects of El Nino and La Nina. Our TP, derived from 21x FY17F EPS, corroborates with our DCF valuation.

Securities average daily value (SADV) was down marginally. Whilst 1Q16 SADV of MYR2.07bn was down 5% YoY, we have assumed a pick-up in trading activities in the latter part of 2016. Our FY16 SADV assumption of MYR2.18bn represents a mild increase of 5% YoY.

Derivatives volume has scope for growth. We expect FY16 derivatives average daily volume to be at about 62,000, higher than 1Q16’s 57,878. CPO futures contracts account for 77% of volume share, and increased trading volume is likely – with the El Nino and La Nina weather phenomena attracting investors into the market.

On the Islamic capital market front, Bursa Suq Al-Sila (BSAS) recorded a 58% YoY rise in average daily value (ADV) to MYR18.7bn, with growth from both domestic and foreign participation. Whilst this is a strong growth segment, it accounted for just a 3.8% share of revenue.

No catalyst in sight. We maintain our NEUTRAL recommendation. Our TP of MYR9.00 is pegged to 21x FY17F EPS. We use DCF as a secondary valuation methodology – which yields a similar MYR9.00 TP, based on 6.8% WACC and 2% TG.