Bursa’s trading volume firm

by **Cals** Fri 25 Oct 2013, 12:56

Business & Markets 2013

Written by HwangDBS Vickers Research

Friday, 25 October 2013 10:22

Bursa Malaysia Bhd
(Oct 24, RM8)
Maintain buy at RM7.96 with a target price of RM10.10: Bursa’s net profit for the third quarter ended Sept 30 of 2013 financial year (3QFY13) fell 16% quarter-on-quarter (q-o-q), in line with the lower average daily securities trading value (RM2 billion against RM2.3 billion in 2QFY13). But daily trading volume remained firm at 1.6 billion shares.

Velocity was weaker at 32% against 37% in 2QFY13. Profit for the first nine months (9M) of FY13 was 80% of our full year FY13 earnings.

Derivatives average daily contract volume grew 10% q-o-q due to higher volatility in the FBM KLCI and increased foreign participation in Crude Palm Oil Futures (FCPO). Stable revenue fell 7% q-o-q due to lower listing and depository fees. Our assumptions for average daily trading volume and value for this year are 1.45 billion and RM1.96 billion. We are keeping our forecasts as we expect seasonally lower trading values and volumes in 4QFY13, while expenses will continue to increase.

Our RM10.10 target price is based on the dividend discount model (DDM) which assumes 90% dividend payout, 7% long-term growth, and 11% cost of equity, and implies 29 times FY14 earnings per share.

The rerating catalysts are a revamp of listing and clearing fees, structural changes in regulatory functions and taxes, and upside from higher liquidity and free float. — HwangDBS Vickers Research, Oct 24

[You must be registered and logged in to see this image.]

This article first appeared in The Edge Financial Daily, on October 25, 2013.