• We maintain HOLD on Bursa Malaysia (Bursa) with a revised fair value of RM9.10/share from RM9.30/share after trimming our FY25F earnings by 1.8% to account for lower DATV assumptions for the securities market. We continue to peg the stock to FY25F PE of 24x based on 10-year historical average PE. With the recent retracement in share price, we see the stock as now trading at a fair 23.3x FY25F PER. This is close to the average of comparable exchange stocks in the region of 24x. Maintain our view of a weaker 4Q24 earnings amidst a risk-off sentiment of investors in trading of securities.
• DATV assumptions on the securities market for FY24F/25F have been revised to RM3.1bil/RM3.2bil from RM3.2bil/RM3.3bil. Maintain our neutral 3-star ESG rating (Exhibit 1).
• 9MFY24 results within expectation accounting for 77.5% of our and 76.7% of consensus estimates.
• Core earnings grew 40.2% YoY to RM241mil in 9MFY24 driven by increase in operating revenue of 31% YoY after excluding a one-off SST provision reversal of RM28mil in 9MFY23. The improvement was supported by higher trading revenue of securities and derivatives market (52.9% YoY and 19.8% YoY) and non-trading revenue of 11.8% YoY. CI ratio was flat at 46% in 9MFY24.
• QoQ earnings grew 6.6% to RM86mil in 3Q24, close to our estimate of RM87mil in our result preview note dated 3rd Oct 2024. Operating revenue rose by 5.3% but was partially offset by higher operating expenses of 5.8%.
• 3Q24 DATV (of on-market transactions) for equities tapered slightly to RM3.5bil from RM3.6bil in 2Q24 with a softer month in Sept 2024. This led to a 9M24 DATV for the securities market of RM3.35bil vs. RM2.02bil in 9M23.
• We continue to expect DATV of the securities market in 4Q24 to be weaker than 3Q24 following the resurgence of concerns on geopolitical tension and uncertainties in policies from the US presidential elections. Velocity of the securities market fell to 43% in 3QFY24 from 45% in 2QFY24.
• The exchange is on track to achieve all its FY24 headline KPI targets including the number of IPOs of 42 from 35 as of 9MFY24. No changes to the guidance for FY24 KPI targets.

Source: AmInvest Research - 1 Nov 2024