Maybank IB raises Bursa Malaysia earnings forecast

KUALA LUMPUR: Maybank Investment Bank Research has raised Bursa Malaysia’s earnings forecast following its latest 1Q17 net profit results. 

The research house said Bursa’s 1Q17 net profit positively surprised (slightly) due to higher trading revenue from equity. 

It said earnings would have been stronger if not for the downward revision in guarantee fee rate for derivatives. 

Equity ADV stays strong at RM2.75bil for April MTD versus RM3.06bil in March, lifting 2017 year-to-date to RM2.61bil, above Maybank’s earlier forecast of RM2bil for 2017. 

“We think this is near-term sustainable and raise our parameters, lifting FY17/18/19 net profit forecasts by 11%/10%/8% respectively, target price to RM10.30 (+16%),” Maybank said. 

It noted that foreign investors have turned net buyers of Malaysia equities. 

“From our recent roadshow to EUR/US, we sense that generally, foreign investors have turned more positive; this could keep trades on Bursa bouyant. 

“Against such a backdrop, we raise our 2017 equity ADV forecast to RM2.45bil, and derivatives volume growth to +8%,” it added. 

Additionally, it said Bursa offered a good trade on the bouyant volume in Malaysia equities. 

“At its current share price (+13% YTD), the implied 2017 equity ADV is RM2.45bil. 

“Every RM0.1bil addition in equity ADV from our base case (and on a full-year basis) would add RM6mil to FY17 net profit and raise our target price by (up to) 30sen. Our target price pegs the stock at 25x FY17 PER,” Maybank said.