Bursa profit plan a good start, albeit conservative

Bloomberg consensus estimates show that researchers
expect Bursa Malaysia's profit to jump 37 per cent this year after
falling 36 per cent in 2010.

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KUALA LUMPUR: Bursa Malaysia Bhd's three-year plan to grow
earnings by 20 per cent annually is conservative but a good start to
track its performance, analysts say.

The country's stock
exchange operator was upbeat on its profit ambitions after announcing
its highest half-year profit in four years on Tuesday.

Analysts pointed out that the profit forecast was not aggressive when compared to consensus estimates.

Bloomberg consensus estimates showed that researchers expect Bursa
Malaysia's profit to jump 37 per cent this year after falling 36 per
cent in 2010.




Last year, Bursa's net profit of RM113.4 million was hit by a one-off capital gain but was close to the consensus estimates.

"It is a comfortable target," said an analyst from Maybank Research.

Analysts believe that the spin-off effects from the government's
Economic Transformation Programme (ETP) would continue to drive the
securities market.

However, they said Bursa Malaysia would have
to do more for 2012 and 2013 since estimates show that earnings would
only grow by an average of 13 per cent annually.

Asked about
Bursa's second-half performance, an analyst was uncertain since eternal
factors could trigger a sell-down by foreign investors.

Bursa's
chief executive officer, Datuk Tajuddin Atan, is hoping to lure more
foreign institutional investors to the local market.

It was
pointed out that the trading volume for the second quarter ended June 30
2011 had dropped to RM1.6 billion a day from RM2.1 billion a day in the
first three months of the year.

The weak market volumes led to a disappointing half-year performance for Bursa, according to Nomura Securities Malaysia Bhd.

"Bursa registered first-half net profit of RM76 million which was only
41 per cent of our full-year estimate and 50 per cent of consensus. The
disappointment was attributed to continued weak market volumes in the
second quarter of 2011," it said.

Revenue from the equities
business declined 23 per cent quarter-on-quarter to RM53 million, led by
a 22 per cent fall in volumes.

"As market's sentiment is
expected to remain cautious in the near term, trading volumes are
expected to remain sluggish," it said in a research report yesterday.