AmInvestment upgrades Bursa to 'buy' on higher trading volume

KUALA LUMPUR: AmInvestment Bank Research has upgraded its earnings outlook on Bursa Malaysia Bhd on the back of higher daily average trading volume (DATV) in the securities market.

The research house had on Thursday raised the stock exchange operator's FY20/21 earnings estimates by 4.9% and 7.3% on DATV of RM4.2bil and RM3.2bil.

"We had earlier expected the DATV for securities market to taper in FY21 with the reintroduction of regulated short selling (RSS) and gradual lifting of the suspension in intraday short selling of proprietary day trading (PDT) and flexibilities in share margin financing.

"However, with the rise in new Covid-19 cases and uncertainties on the duration of the latest lockdowns, volatility continued to persist in markets.

"Hence, this has caused the YTD (4–14 Jan 21) average DATV for equities to remain high at RM5.3bil," it said.

AmInvestment also increased its assumptions for the average daily contracts traded for derivatives in FY20/21 to 73,000 and 75,920.

Its fair value on the stock was increased to RM9.65 a share from RM9.50 a share.

"We are now pegging the stock to FY21 PER of 26x (previously: 28x) in line with the average of listed stock exchanges regionally," it said.

Concomitantly, its recommendation was raised to "buy" from "hold" previously.

AmInvestment expects Bursa Malaysia's 4Q20 earnings to fall 1.9% quarter-on-quarter (q-o-q) to RM119.6mil based on a lower DATV for the securities market despite an improvement in the derivatives trading scene.

The stock exchange operator is scheduled to release its 4Q20 results on Feb 2, 2021.
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