BURSA MALAYSIA BHD

By Affin Hwang Capital Buy (maintained) Target price: RM12

NEW capital market measures, a stronger ringgit, a stronger pipeline of initial public offerings (IPOs) and the upcoming general election are some of the key catalysts for Bursa Malaysia Bhd.

Affin Hwang Capital, which recently hosted a Non-Deal Roadshow (NDR) for Bursa in Hong Kong and Singapore, said investors were generally excited about the shares of the equity market regulator, as they viewed the counter as a beta play (being the proxy to the Malaysian securities market) and as a high-yield play.

Affin Hwang Capital noted that many investors have continued to monitor Bursa closely due to the strong start in the equity market average daily value (ADV), which was about RM3.16bil between Jan 2 and March 2, almost 25% higher than in 2017.

The brokerage reiterated its “buy” call, with an unchanged 12-month price target of RM12 based on 26 times 2018 estimated earnings.

According to Affin Hwang Capital, 2018 could turn out to be another robust year in the Malaysian equity market and potential catalysts such as the BURSA-SGX Trading Link (to be launched by end-2018) could boost the outlook for Bursa.

The brokerage said as investors continue to look for post-trade benefits of the BURSASGX Trading Link, this would likely be the key re-rating factor not just for Bursa, but for all other listed securities on the exchange.

At present, however, the missing links in the Malaysian market are a more diversified structured product offering (such as single stock options, additional stock index future, mini-derivatives contracts) and key domestic institutional investors being in the derivatives market (as a hedging tool), Affin Hwang Capital said.