4QFY24 net profit of Bursa Malaysia is expected to be weaker QoQ due to a lower DATV for the securities market. Velocity for the securities market fell 12pp QoQ to 31% in 4QFY24. Looking ahead, domestic liquidity and pipeline for IPOs in the securities market remain healthy. Nevertheless, challenges continue to be seen on foreign fund inflows due to the elevated interest rates in US supporting a strong USD. Besides, there remain uncertainties on the impact of US's trade and fiscal policies. We maintain HOLD on Bursa Malaysia (Bursa) with an unchanged TP of RM9.10/share, pegging the stock to FY25F PE of 24x based on 10-year historical average PER. The stock is now trading at fair 23x FY25F PER, close to the average of comparable exchange stocks in the region of 24x.

• Expect lower earnings in 4QFY24 attributed to a weaker securities market trading revenue. Bursa will be releasing its 4QFY24 results on the 27th of Jan 2025. We expect the 4Q24 earnings to be RM64mil (-25.4% QoQ) contributed largely by lower securities market trading revenue. This is expected to bring the core 12M24 net profit to RM306mil (+37% YoY). We project the 12M24 operating revenue to rise by 124.5% YoY to RM738mil supported by improved securities and derivatives trading revenue. All headline financial KPI targets for FY24 are expected to be met.
• 4QFY24 DATV (of on-market transactions) for equities slipped to RM2.6bil from RM3.6bil in 3QFY24. FY24 DATV for the securities market was RM3.15bil vs. RM2.04bil in FY23. For FY25, we maintain our DATV assumption of RM3.2bil for the securities market which is flat compared to FY24. Whilst we see a healthy pipeline of IPOs for the securities market in FY25, challenges remain on inflows of foreign funds due to continued elevated interest rates supporting a strong USD. Lesser rate cuts (up 2 reductions) in US are seen in 2025. Additionally, geopolitical tensions are still ongoing while uncertainties remain on impact of US's trade and fiscal policies. Foreign funds outflow from the securities market of RM7.8bil cumulatively was recorded in 4QFY24. This contrasted with an inflow of RM4.4bil in 3QFY24. 2024 saw outflow of foreign funds from the securities market of RM4.2bil (2023: outflow of RM2.3bil).
• Moderate increase in derivatives trading revenue QoQ in 4QFY24. The quarterly daily average contracts (ADC) traded for derivatives market rose by 18.1% QoQ to 107,000 contracts. This was contributed by a higher ADC traded for FCPO, partially offset by a drop in ADC for FKLI. With the continued volatility in market, ADC traded rose to 92,106 in FY24 vs. 72,896 in FY23.

Source: AmInvest Research - 14 Jan 2025