KUALA LUMPUR: Bursa Malaysia Bhd’s lower net profit for the first quarter ended March 31, 2023 (1Q FY2023) was within expectations, according to analysts.
MIDF Research has maintained its “buy” recommendation on the stock with an unchanged target price (TP) of RM7.30, while Kenanga Research retained its “market perform” call with a TP of RM6.25.
MIDF Research has not made changes on the earnings estimate on Bursa Malaysia despite the exchange’s 1Q FY2023 earnings falling 17.4 per cent year-on-year (y-o-y) to RM56.17 million, dragged by the securities market segment’s lower trading revenue.
In a research note, it said that weakness in trading activities continues to be a feature due to the volatility in global markets caused by the US Federal Reserve’s (Fed) actions and geopolitical issues.
This, it said, may have led to or exacerbated the normalisation of retail trade.
“However, we expect that the further pivot by the US Fed as it slows the pace and pauses its rate hikes will improve sentiment and market valuation going forward.
“This will be a boost to global equities trading activities. In fact, we have seen better performance in the mid and small-cap space with the FBM70 index and FBM Small Cap index this year,” said MIDF Research.
Meanwhile, Kenanga Research said the 1Q FY2023 net profit was within its expectations, but the securities’ average daily trading value (ADV), which decreased 14.9 per cent y-o-y in 1Q FY2023, continued to demonstrate sequential softness, which it anticipated would pick up “with hopes that macros will consistently perform.”
Besides, it said, supportive initial public offering (IPO) performance and new income streams could pan out favourably in the medium term.
On risks to its “market perform” call, Kenanga Research said these include higher/lower-than-expected trading volume in the securities and derivatives markets; higher/lower-than-expected operating expenses; more/fewer-than-expected initial IPOs; and higher/lower-than-expected dividend payout.
As at 10.59 am, Bursa Malaysia shares were two sen lower at RM6.28 with 175,300 shares traded. – BERNAMA
