• Key Highlights. 2024 Core EPS of 38.3sen (+23% YoY) met our estimates but beat consensus. Revenue grew 27.2% YoY, good cost control improved the cost-to-income ratio to 47.6% (-0.2PPT YoY). However, a higher tax rate of 24.8% (versus 21.8% in FY23) reduced net income margin by 1.4 PPT YoY to 39.5%. Total DPS of 44sen (+52% YoY), made up of 36sen ordinary (+24% YoY) and special of 8sen (none YoY), with record payout ratio of 94%. Separately, Datuk Umar Swift will retire after six years leading the Group, and Dato' Fadl' Mohamad (current MD wholesale banking for RHB) to succeed.
• Earnings Revision. No change is made to in our FY25-26F earnings forecast. For 2025, our assumptions are: (i) Equities ADV of RM3.2bn; (ii) cost-to- income ratio of 47%; and (iii) 24% tax rate. Every RM0.1bn equity ADV delta from our base case will impact net profit by RM8m (~2.5%).
• Outlook. Management guides for 2025 PBT of RM369-408m, flat to -10% lower vs. 2024. This is 10% below our FY25 forecast, but we are keeping our forecast because the management has a track record of under promising and over delivering, as was the case in 2024. They guided for a conservative ADV outlook due to the current global market volatility, but non-trading revenue is forecasted to grow 5-7% YoY, with 60 IPOs (vs. 55 in 2024) in the pipeline. Furthermore, new businesses have reached scalability and will start contributing positively to the Group. We caution that 1Q25 will be soft due to President Trump's inauguration, school holidays, CNY, and Ramadhan fasting month. The market activity will pick-up from 2Q25 onwards, in our view.
• Maintain BUY (TP: RM11.10). Our target price of RM11.10 is derived from 26x FY25 PE (+1SD above its 10-year mean), underpinned by superior ROE, net cash balance with positive free cash flow, and strong commitment to shareholder return. Malaysian markets' renowned historical stability will appeal to investors, especially from domestic institutions. Furthermore, the strong IPO pipeline will help spur demand. Bursa is the cheapest stock among Asian peers on PE and P/FCF metrics, while boasting the highest ROEs and dividend yields. Compared to developed markets in Europe and North America, it is a bargain. Maintain BUY.

Bursa Malaysia Historical Valuations

Source: BIMB Research - 28 Jan 2025