‘MARKET PERFORM’ CALL FOR BURSA MALAYSIA

Pipeline of 39 listings may fuel interest in securities, says Kenanga Research

KENANGA Investment Bank Bhd (Kenanga Research) has cut its financial year 2023 earnings forecast for Bursa Malaysia Bhd by 13 per cent, factoring in higher operating costs.

The research firm said as Bursa Malaysia reverted to a normalised trading climate, it had sought to ramp up its non-trading revenue by launching new products and services such as the Bursa gold dinar as well as the commercialisation of new debt fundraising with RAM Holdings Bhd, catering to small and medium enterprises.

Capitalising on enterprise data solutions could also present growth opportunities for the group, it said.

“To support these efforts, on top of skills acquisitions, a large capital expenditure of RM70 million would be allocated mainly to beef up operating systems.

“The group is positive that a strong pipeline of 39 initial public offerings could fuel interest in securities.”

Overall, Kenanga Research said Bursa Malaysia could report a pre-tax profit of RM295 million to RM326 million in its financial year 2023.

It said Bursa Malaysia’s financial year 2022 net profit of RM226.6 million had missed its forecast by six per cent.

Nevertheless, this was in line with consensus’ estimate of RM227.6 million.

“The negative deviation on our part was due to higher-than-expected marketing investments owing to new initiatives (i.e. Bursa RISE, Carbon Exchange),” it said.

Kenanga Research also introduced financial 2024 numbers, implying an eight per cent earnings growth.

“This is supported by progressive growth across its portfolios with some moderation in expenses. In terms of average daily value, we maintain our financial year 2023 input of RM2,300 million, with financial year 2024 at RM2,400 million backed by higher participation.”

It maintained a “market perform” call on Bursa Malaysia with a lower target price of RM6.25 from RM6.60 previously.