Investment Highlights

• We maintain HOLD on Bursa Malaysia (Bursa) with an unchanged fair value of RM9.30/share pegging the stock to FY25 PE of 24x. Valuation remains stretched with the stock trading at 24.5x FY25F PE, 0.8 standard deviation above its post pandemic historical average of 20x with prospects of a higher DATV of the securities market already priced in. Current share price implies of DATV of the securities market of RM3.5bil which is higher than the 9M24 average of RM3.35bil. Hence, we continue to recommend for investors to lock in gains amidst the present risk-off sentiment in the market.
• Fine-tuned our FY24F earnings by +2.4% after tweaking our projection for staff cost slightly lower. We maintain our DATV assumptions on the securities market of RM3.2bil/RM3.3bil/RM3.1bil and ADC traded assumptions on the derivatives market of 85,000/80,000/75,000 for FY24F/25F/26F. Maintain our neutral 3-star ESG rating (Exhibit 1).
• Bursa will be releasing its 3Q24 results on the 30th of Oct 2024. We expect the 3Q24 earnings to be RM87mil (+8.4% +QoQ) contributed largely by higher securities and derivatives trading revenue. This is expected to bring the 9M24 net profit to RM243mil (+26% YoY). We project the 9M24 operating revenue to rise by 29.7% YoY supported by improved trading activities in the securities and derivatives market.
• 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 expect DATV of the securities market in 4Q24 to be weaker than 3Q24 following the resurgence of concerns on geopolitical tensions, outflow of foreign funds from the announcement of China's stimulus packages while institutional trades are likely to be conservative to protect downside risk towards the end of year with the uncertainty in policies from the US presidential elections. Velocity of the securities market slipped to 41% Sept 2024 from 46% in Aug and 43% in July 2024.
• Foreign fund inflows to the securities market were higher at RM4.4bil in 3Q24 vs. RM46mil in 2Q24. YTD (Jan to Sept 2024) saw inflows of foreign funds into the securities market of RM3.5bil cumulatively.

Source: AmInvest Research -