PETALING JAYA: Thanks to a spike in stock trading activities, Bursa Malaysia Bhd is expected to see another record earnings in its upcoming third-quarter results for the July to September period.
In a report on the company, CGS-CIMB Research estimates that net profit could come in at about RM128.2mil for the third quarter, representing growth rates of 172.1% year-on-year (y-o-y) and 48.7% quarter-on-quarter.
Bursa Malaysia is slated to announce its third-quarter financial results on Oct 27.
“The key earnings driver for the third quarter of 2020 would be the robust average daily trading value (ADTV) of the equity market, which spiked 200% y-o-y to an all-time high of RM5.8bil in the quarter, ” CGS-CIMB said.
The volume was higher by 50% compared to the second quarter’s RM3.9bil, boosted by retail participation in the local stock market.
On Aug 7, the market’s trading volume ballooned to 18.1 billion – the highest level ever. The value of shares traded, meanwhile, stood at RM7.06bil that day.
The trading activity on the stock market was boosted by the loan moratorium period and cheap credit, thanks to the low-interest rate environment.
Meanwhile, the average daily contracts (ADC) for the derivative market also increased by a strong 13.9% y-o-y in the third quarter, CGS-CIMB said.
The research firm said it has upgraded Bursa shares to a “hold” from “reduce” on expectations of a “sterling third quarter”.
Yesterday, shares in Bursa closed 15 sen higher at RM9.00.
In August, its shares had traded to a high of RM10.60 apiece.
However, in terms of valuation, CGS-CIMB said the stock’s price-earnings ratio (PE) is “not attractive” although the latter’s share price has declined almost 16% from its peak in August.
“Bursa Malaysia’s calendar year 2021 (CY21) forecast PE has subsided from 36.6 times, when its stock price hit an all-time high of RM10.60 on Aug 5, to 31.2 times on Oct 16, following the 16% drop in share price within this period.
“On a regional comparison, Bursa Malaysia’s valuation is not attractive, in our view, as its CY21 forward PE is significantly above the Singapore Exchange’s 23.3 times, though lower than the Hong Kong Exchange’s 34.7 times, ” CGS-CIMB said.
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