Bursa biggest proxy for vibrant equity market, says CGS-CIMB

KUALA LUMPUR (Feb 2): CGS-CIMB Securities has upgraded Bursa Malaysia Bhd to “add” at RM7.47, with a higher target price of RM8.50 (from RM6.90), and said the stock market operator is the biggest beneficiary of the increased vibrancy of the equity market.

In a note on Wednesday, the research house projected a 15% growth in average daily trading value (ADTV) in 2024.

It said Bursa’s net profit for the financial year ended Dec 31, 2023 (FY2023) was 4% below the house forecast, due to lower-than-expected equity revenue arising from weaker ADTV for the equity market.

“However, its FY2023 net profit was above 106% of the Bloomberg consensus estimate. Its FY2023 dividend per share (DPS) of 29 sen (15 sen interim DPS and 14 sen final DPS) was in line with our forecast of 29 sen.

“A potential rerating catalyst would be our projected 15% increase in equity ADTV in FY2024, and our expected expansion in the return on equity for Bursa from 29.5% in FY2024 to 31.5% in FY2026.

“Potential downside risks would be a decrease in trading activities in the equity and derivative markets, a wider-than-expected increase in operating expenses, and weaker stable income,” CGS-CIMB said.