Bursa’s FY22 net profit slips, seeks to ramp up
KUCHING: Bursa Malaysia Bhd’s (Bursa Malaysia) financial year 2022 (FY22) missed analysts expectations with a reported net profit of RM226.6 million.
The negative deviation on Kenanga Investment Bank Bhd’s (Kenanga Research) part was due to higher-than-expected marketing investments owing to new initiatives like the Bursa RISE and Carbon Exchange.
Year on year (y-o-y), FY22 operating revenue fell by 22 per cent mainly due to bogged down trading revenue from securities market by 41 per cent. Average daily volume (ADV) closed at RM2.06 million , as peak sentiment from pandemic spurred trading cooled down and normalised.
That said, the earlier-thanexpected 15th General Election in the final quarter of 2022 (4Q22) positively spurred trading activities.
“Meanwhile, derivatives trading benefited from volatile commodity prices. Cost-toincome ratio rose to 48.5 per cent on the back of a lower top line in addition to lumpy market spend in 4Q22.
“All in, FY22 net profit reported in at RM226.6 million, a drop of 36 per cent.”
As Bursa reverts to a normalised trading climate, the group seeks to ramp up its nontrading revenue by launching new products and services such as the Bursa Gold Dinar as well as the commercialisation of new debt fund raising with RAM, catering to SMEs.
Capitalising on enterprise data solutions could also present growth opportunities for the group. To support these efforts, on top of skills acquisitions, a large capex budget of RM70
Meanwhile, derivatives trading benefited from volatile commodity prices. Cost-toincome ratio rose to 48.5 per cent on the back of a lower top line in addition to lumpy market spend in 4Q22.
Kenanga Research
million would be allocated mainly towards beefing up operating systems.
Meanwhile, the group is upbeat that a strong pipeline of 39 initial public offerings (IPOs) could fuel interest in securities. Overall, the group opines that it could report a pre-tax profit of RM295 million to RM326 million in FY23.
“Against FY22’s RM310 million, it is indicative that FY23 could be flattish in favour of longer-term sustainable earnings,” Kenanga Research said.
MIDF Amanah Investment Bank Bhd (MIDF Research) opine the weakness in trading activities in FY22 was due to volatility in global markets caused by US Fed’s hawkish stance and geopolitical issues.
“This may have led or exacerbated the normalisation of retail trades,” it said in its own analysis. “However, we expect that the further pivot by the US Fed as it slower the pace and pause 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 FBM70 index and FBM Small Cap index chalking five and 8.1 per cent in gains year-to-date respectively.”
After two straight years of ADV contraction, Hong Leong Investment Bank Bhd (HLIB Research) was hopeful for a modest reprieve in FY23.
“Note that in the past decade, ADV has never declined for more than two consecutive years. Granted, January’s ADV of RM2 billion is short of our FY23 target, but we are still in the early days.
“While the rising probability of a US recession and its contagion could dampen investor sentiment, we reckon that China’s reopening will offer some cushioning effect to this.”