Stock Name: BURSA
Company Name: BURSA MALAYSIA BHD
Research House: MAYBANK
Bursa Malaysia Bhd
(April 21, RM7.67)
Maintain sell at RM7.60 with an unchanged target price of RM6.50: Bursa's RM28 million 1Q10 net profit was within our expectations, at 23% of our full-year forecast, but below consensus, at 20%.
The results showed a marked improvement due to higher market activities. There is no change to our earnings forecasts and target price, pegged to 20 times 2011 earnings plus available cash. Bursa is still trading at a premium to its peers, sell.
1Q10 core net profit rose 81% year-on-year (y-o-y) and 38% quarter-on-quarter (q-o-q). Operating revenue jumped 41% y-o-y and 9% q-o-q driven by improved trading revenue from equity (+103% y-o-y, +18% q-o-q), which made up 49% of the total.
Equity average daily trading value (ADV) was stronger at RM1.53 billion in 1Q10 (+122% y-o-y, +26% q-o-q), on a higher trading velocity of 35% (+12 percentage points y-o-y, +7ppt q-o-q). The earnings before interest and tax (Ebit) margin rose to 45% (+10.8ppt y-o-y, +9ppt q-o-q) partly due to lower staff costs after year-end bonus. We retain our ADV forecasts at RM1.34 billion for 2010 (+10% y-o-y) based on a weaker market outlook in 2H. We project a stronger RM1.56 billion ADV (+16% y-o-y) for 2011.
Consequently, we forecast a 22% growth in net profit in 2010 and 18% in 2011. Bursa's collaboration with the Chicago Mercantile Exchange (CME) for derivative products should see the full impact from 2011 onwards.
Bursa's focus in 2010 would be to strengthen liquidity and efficiencies in equities, develop the derivatives market further and internationalise Islamic market products.
At current levels, it continues to trade above its peers - seven to 10 times 2010 price-earnings ratio (PER) multiples above the Hong Kong and Singapore exchanges. Foreign shareholding however has come off to 15.6% as at March 2010, from 17.6% as at Dec 2009. - Maybank IB, April 21
This article appeared in The Edge Financial Daily, April 16, 2010.
Company Name: BURSA MALAYSIA BHD
Research House: MAYBANK
Bursa Malaysia Bhd
(April 21, RM7.67)
Maintain sell at RM7.60 with an unchanged target price of RM6.50: Bursa's RM28 million 1Q10 net profit was within our expectations, at 23% of our full-year forecast, but below consensus, at 20%.
The results showed a marked improvement due to higher market activities. There is no change to our earnings forecasts and target price, pegged to 20 times 2011 earnings plus available cash. Bursa is still trading at a premium to its peers, sell.
1Q10 core net profit rose 81% year-on-year (y-o-y) and 38% quarter-on-quarter (q-o-q). Operating revenue jumped 41% y-o-y and 9% q-o-q driven by improved trading revenue from equity (+103% y-o-y, +18% q-o-q), which made up 49% of the total.
Equity average daily trading value (ADV) was stronger at RM1.53 billion in 1Q10 (+122% y-o-y, +26% q-o-q), on a higher trading velocity of 35% (+12 percentage points y-o-y, +7ppt q-o-q). The earnings before interest and tax (Ebit) margin rose to 45% (+10.8ppt y-o-y, +9ppt q-o-q) partly due to lower staff costs after year-end bonus. We retain our ADV forecasts at RM1.34 billion for 2010 (+10% y-o-y) based on a weaker market outlook in 2H. We project a stronger RM1.56 billion ADV (+16% y-o-y) for 2011.
Consequently, we forecast a 22% growth in net profit in 2010 and 18% in 2011. Bursa's collaboration with the Chicago Mercantile Exchange (CME) for derivative products should see the full impact from 2011 onwards.
Bursa's focus in 2010 would be to strengthen liquidity and efficiencies in equities, develop the derivatives market further and internationalise Islamic market products.
At current levels, it continues to trade above its peers - seven to 10 times 2010 price-earnings ratio (PER) multiples above the Hong Kong and Singapore exchanges. Foreign shareholding however has come off to 15.6% as at March 2010, from 17.6% as at Dec 2009. - Maybank IB, April 21
This article appeared in The Edge Financial Daily, April 16, 2010.
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