KUALA LUMPUR (July 19): Bursa Malaysia Bhd (KL:BURSA) may report an 8.2% year-on-year (y-o-y) growth in net profit for the second quarter ended June 30, 2024 (2QFY2024), thanks to robust trading activity in the capital market, CGS International said.

Quarterly net profit will probably come in at RM82.5 million, lifting first-half earnings to RM157.5 million, according to CGS in a results preview note. That would be above market expectations, accounting for 55% of the Bloomberg consensus full-year estimate, it noted.

If the write-back in sales and service tax recorded in 2QFY2023 is excluded, net profit would have been 71% higher in 2QFY2024, CGS flagged. Bursa is scheduled to announce the results by month end.

“Bursa is a key beneficiary of the pickup in trading activity in the capital market,” CGS said. The house raised its target price to RM11.10 from RM8.70, and kept the stock on an ‘add’ call, equivalent to a ‘buy’ recommendation.

The average daily trading value of the equity market more than doubled y-o-y to RM3.62 billion in 2QFY2024. In the derivatives market, the daily average rose nearly 10% to 85,600 contracts.

Income generated from the equity market accounted for 48.4% of Bursa’s 1QFY2024 revenue, while derivatives made up 14.1%.

“In addition, we are encouraged to observe an across-the-board increase in trading activity of all major types of investors in Malaysia’s equity market,” CGS said.

The forecast for 2QFY2024 also took into account 'flattish' other income - including fees for listings, depository services, market data, member services and connectivity, conferences and exhibition-related income - CGS said. All in, The research house raised its FY2024-FY2026 earnings per share forecasts by 17%.

For FY2024, CGS is calling for a net profit of RM303.8 million, or 38 sen per share, above the consensus estimate of 35.9 sen per share.

Shares in Bursa have climbed 43% so far this year, thanks to the surge in trading activity and a slew of initial public offerings, while analysts remain bullish on the stock. A majority of 10 out of 15 research houses covering the counter have a ‘buy’ call, while the rest have ‘hold’ ratings, according to Bloomberg.

The stock has also blown past the consensus 12-month target price of RM9.25, and was trading at RM9.89 at Friday's noon trading break.

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