PETALING JAYA: Bursa Malaysia Bhd’s net profit growth is likely to be in the triple-digit range or about 117% for its fourth quarter ended Dec 31,2020 (Q4).
CGS-CIMB, in a note, said the net profit will be driven by a 143% jump in the average daily trading value (ADTV) for the equity market in Q4 due to higher retail interest.
It estimates a net profit of RM99mil for Q4 though 18.5% lower than the RM121mil recorded in Q3.
Apart from the year-on-year (y-o-y) rise in equity income, the net profit rise would also be led by a rise in derivative income, in line with the estimated growth in the Q4 average daily contracts for the derivative market.
According to the research firm, this would represent the second consecutive quarter of triple-digit net profit growth following the 158% y-o-y surge in Q3.
It estimates that Bursa could post a net profit in the region of RM372mil for the full financial year 2020.
It noted that in Q4, the ADTV for the equity market slid by 14.8% quarter-on-quarter to RM5bil following the end of the blanket loan moratorium (BLM) on Sept 30,2020.
With the end of the BLM, most borrowers would have to start repaying their loans in Q4, and this would reduce liquidity in the equity market.
However, the y-o-y growth in ADTV remained strong in Q4, versus the RM2.05bil in the Q4 of 2019.
CGS-CIMB retains its target price forecast of RM9.18 per share and a “hold’’ call on the stock. It said it regards Bursa’ valuation to be rich as its FY22 price to earnings ratio of 29.5 times, is close to two standard deviations above its 5-year historical average of 21.7 times.
The high valuation was the key reason for its “hold’’ call for the stock.
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