RHB Research maintains Buy on Bursa, ups TP to RM7.60

  • Business
  • Tuesday, 30 Apr 2019

KUALA LUMPUR: RHB research has maintained its buy call on BURSA MALAYSIA BHD with a higher target price of RM7.60 from RM7.50 previously following 1Q19 earnings that were in line with its expectations.

It said on Tuesday that net profit for 1Q19 was RM46.9mil, 26.5% lower year-on-year (y-o-y), representing 20% of its pre-results FY19 forecast.

The research house said the stock exchange's 1Q19 securities average daily value (SADV) fell 18% y-o-y but grew 18% quarter-on-quarter (q-o-q) to RM2.41bil.

It assumes a SADV of RM2.35bil in 2019 and a SADV of RM2.5bil in 2020.  

"We believe global developments, eg optimism over the US-China trade talks, could keep equities trading active in 2Q-4Q, as investors reposition their portfolios," it said.

Derivatives average daily contracts (DADC) was down 12% y-o-y and 19% q-o-q to 47,359.

"The YoY weakness was largely due to a 19% YoY decline for FCPO contracts traded – which accounted for 79% of total contracts traded," it said.

However, RHB expects 2019 DADC of 56,488 as volumes are expected to pick up in subsequent months.

The research house also forecasts a FY19 DPS of 26 sen.

"Total FY18 DPS (inclusive of a MYR0.08 special dividend for 2Q18) was MYR0.336. 

"2019F dividend yield (without factoring in any special dividend) is a respectable 3.7% – close to the 10-year Malaysia sovereign bond yield of 3.77%," said RHB Research.

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