• Maintain NEUTRAL and MYR8.80 TP, 4% upside with 4% FY25F yield. Bursa Malaysia's FY24 results are broadly in line with our expectations, with a special dividend declared after commendable securities, derivatives and IPO market performances during the year. In 2025, the outlook for the securities market appears more challenging, but this could be mitigated by continued resilience in BURSA's non-securities operations. We remain NEUTRAL on the stock, as we expect negative earnings growth from the bourse in 2025, while its near-mean valuation looks fair.
• Results review. 4Q24 net profit of MYR68.9m (+16% YoY, -20% QoQ) brought the full-year total to MYR310.1m (+23% YoY) - this broadly met our expectations. Total income for the year surged 27% YoY, powered by a strong securities and derivatives market, while CIR remained flat at 48%. For the 4Q, total income declined 12% QoQ as a result of the lower securities average daily value (SADV), while opex was seasonally higher, leading to a CIR of 54% (3Q24: 45%, 4Q23: 54%). The exchange declared a final DPS of 18 sen, bringing the full-year DPS to 36 sen (94% payout ratio, FY23: 93%). BURSA also declared a special DPS of 8 sen, bringing the full payout ratio for the year to 136%.
• Navigating muddy waters. 2024 SADV of MYR3.44bn indicated a 50% increase YoY, driven by a resilient domestic economy and solid progress on national development initiatives, among others. For 2025, we believe the SADV outlook is less clear, given uncertainties surrounding global trade and monetary policies and geopolitical risks - in fact, Jan 2025 SADV of MYR2.83bn (as at 24 Jan) is 18% lower than the 2024 level. Encouragingly, however, we think the derivatives market could continue to outperform, led by continued strong trades of CPO futures, as we expect the commodity's price to remain buoyant, at least in 1H25.
• The way forward. BURSA's 2025 KPI includes a PBT target of MYR369-408m, ie a 1-10% decline YoY. As SADV is unlikely to perform up to the level in 2024, the exchange will look towards the derivatives market and other non-trading revenue (eg data business, new listings) to make up some of the lost ground. In fact, BURSA is expecting to clock 60 IPOs in 2025, including a potential sizeable listing with a MYR15bn market capitalisation. Lastly, BURSA announced the appointment of Dato' Fad'l Mohamed as its new CEO, replacing Datuk Muhamad Umar Swift, who is retiring.
• We make minor changes to our earnings forecasts, mostly due to housekeeping adjustments following the release of the full-year financials. We also introduce our FY27F estimates in this report. Our TP is maintained at MYR8.80 (reflecting an unchanged 24.5x P/E target), and includes a 6% ESG premium, based on our in-house proprietary ESG scoring methodology.

Source: RHB Research - 28 Jan 2025