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


RHB research has maintained its buy call on Bursa Malaysia Bhd.

RHB research has maintained its buy call on Bursa Malaysia Bhd.

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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