Bursa Malaysia’s FY16 results within expectations

KUCHING: Bursa Malaysia Bhd’s (Bursa Malaysia) financial year 2016 (FY16) results has come in within analysts’ expectations.

Bursa Malaysia announced in a statement that the group had recorded a profit after tax and minority interest of RM193.6 million for the financial year ended December 31, 2016, a marginal drop of 2.5 per cent from RM198.6 million reported in FY15.

Bursa Malaysia’s FY16 PATAMI of RM193.6 million was within the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) and consensus expectations, accounting for 99 per cent and 98 per cent of its and consensus full-year estimate respectively.

MIDF Research noted that although Bursa Malaysia’s earnings performance was rather dull in 2016, the group has still been able to pay a higher dividend payout.

“The management has proposed a final single tier dividend of 17sen per share in respect of FY16,” the research arm said.

It added that this brings total dividend of 34sen for FY16, which translate into payout of 94 per cent (versus 93 per cent in FY15).

Bursa Malaysia’s results were also in line with the research arm of TA Securities Holdings Bhd’s (TA Research) expectations as FY16 total revenue and profit before tax (PBT) accounted for 96 per cent and 99 per cent of its full year estimates.

On the outlook, TA Research did not foresee a strong inflow of foreign funds in 2017.

“Management also foresees a challenging year ahead for the equities market,” the research arm said.

In 2016, TA Research noted there were heavy foreign fund outflows in May due to MSCI reducing the weightage for Malaysian stocks and November, post the US presidential election.

“Total net foreign outflow in 2016 amounted to RM3.2 billion.

“This is the third year of consecutive outflow for the country,” it added.

The research arm continued to foresee softer trading activities for the remaining part of the year as sentiments remain depressed by broad macro uncertainties.

TA Research highlighted that the volatility in commodity prices and the FBM KLCI should continue to help spur activities in the derivatives market.

“On the Islamic capital front, Bursa noted that transactions on Bursa Suq Al-Sila’ could see some boost from the introduction of a fully integrated Islamic securities exchange platform.

“Bursa Malaysia-i, the world’s first fully integrated Islamic securities exchanged platform was launched in September 2016.

“According to Bursa Malaysia, this platform is expected to help attract a wider pool of both domestic and foreign investors,” the research arm said.

Adjusting for the FY16 results, TA Research tweaked its FY17 and FY18 net profit forecast lower to RM195.3 million and RM205.1 million from RM223.4 million and RM246.5 million.

The research arm forecasted better profit growth of 6.4 per cent to RM218.3 million in FY19, underpinned by expectations of recoveries in market sentiments and pickup in capital market activities.

It expected corporate exercises and trades to remain tepid in 2017 as global uncertainties weigh on domestic activities.

TA Research also lowered Bursa Malaysia’s target price to RM8.50 per share on the back of the downward revision to its earnings estimate.