Hot Stock Bursa rises 1.5% on potential higher dividends

by **Cals** Wed 18 Dec 2013, 01:27

Hot Stock Bursa rises 1.5% on potential higher dividends
Business & Markets 2013
Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com
Tuesday, 17 December 2013 15:36

KUALA LUMPUR (Dec 17): Bursa Malaysia Bhd rose as much as 1.5% after analysts said the stock exchange operator and regulator may pay higher dividends from its cash reserves.

At 3.09pm, Bursa rose nine sen to RM8.05 with some 54,000 shares changing hands. Earlier, its share price rose as much as 12 sen to RM8.08.

The stock was one of the top gainers on the exchange.

HwangDBS Vickers Research Sdn Bhd (HDBSVR) expects Bursa to pay a net dividend of 49.8 sen a share in current financial year ending December 31, 2013 (FY13). This compares to 27 sen in FY12.

HDBSVR said in a note today it has maintained its “buy” rating on Bursa shares with a target price of RM10.10. HDBSVR said Bursa’s strong cash flow and low capital expenditure (capex) should support higher dividend payouts.

“Based on our FY13 net profit forecast and 90% payout, we expect Bursa to declare a final dividend of 13.7 sen; this excludes the special dividend.

“All in, we expect 49.7 sen per share total dividend or RM265 million, which translates into 150% payout or 6% yield (including special dividend),” said HDBSVR.

HDBSVR said Bursa has excess cash of RM400 million after setting aside RM265 million for FY13 dividends.

Bursa intends to use the excess cash for business expansion. The cash is also earmarked for clearing guarantee funds.

Going forward, Bursa's capex is expected to stay low as it is in its final leg of its technology upgrade. The firm is replacing the current Bursa trade system with a more efficient trading platform.

“With that leg completed, we expect capex requirement to remain low,” said the research house.

According to Bloomberg data, Bursa shares had risen to a six-month intraday high of RM8.29 on October 28, 2013 after falling to a low of RM6.90 last August 28.