KUALA LUMPUR: Affin Hwang Capital Research is upbeat on Bursa Malaysia Bhd
, with potential catalysts such as the Bursa-SGX to be launched at year-end and 2018 potentially being another robust year in the Malaysian equity market.
The research firm maintained its buy rating on the counter with a target price of RM12 based on a 26x price-earnings target on 2018E earnings per share.
"Investors perceive Bursa as a beta play (being the proxy to the Malaysian securities market) and as a high-yield play."
It added that the stock exchange is being monitored closely by investors due to the strong start in the equity market average daily value, which was about RM3.16bil between Jan 2 and March 2, 2018, almost 25% higher than in 2017.
Affin Hwang Capital, which recently hosted a Non-Deal Roadshow for Bursa Malaysia in Hong Kong and Singapore, said the key discussion points were on Bursa's recent 4Q17 results, capital market initiatives, initiatives to improves its product offering, IPO pipeline, sustainability of its dividends, capex plans, sustainability of trading volumes and potential revision in fees.
"In our view, as investors continue to look for post-trade benefits of the Bursa-SGX Trading Link (to be up by end-2018), this would likely be the key re-rating factor not just for Bursa, but for all other listed securities on the exchange."
THe research firm noted, however, that there are missing links in the Malaysian market, such as 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).
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