HLIB Research said it is hopeful the average daily value recovery seen in the second half of 2023 would continue into 2024.
KUALA LUMPUR: Brokerage fees that are charged by stockbrokers for the trading of shares on its exchange will remain exempted from sales and services tax (SST), according to the latest Budget 2024 announcement.
However, Hong Leong Investment Bank Research points out that some of Bursa’s other services will be subjected to the higher SST regime.
“To recap, the Finance Ministry had previously confirmed that certain services of Bursa are subjected to SST effective Apr 2022. As such, these services will be subjected to the SST hike from 6% to 8% starting March 2024,” it said.
“Recall that the SST exemption on brokerage was previously introduced in Budget 2022 as a ‘token compensation’ for increasing the stamp duty from 0.1% to 0.15%,” it added.
Moving forward, the research house said it is hopeful for an average daily value (ADV) recovery seen in the second half of 2023 to continue into 2024, given diminishing political risk premium locally and peaking of the Federal Reserve’s rate upcycle.
“Until the second half of 2023 up to Oct 23, ADV totalled RM2.11bil, improving 7.5%, compared to the first half of RM1.96bil. As the reprieve was milder than anticipated, we lower our financial year 2023 ADV assumption by 3.4% to RM2.05bil, implying flattish figures year-on-year,” it said.
It noted that while its earnings forecast is lowered, this is more than offset by the rolling forward of valuation horizon at an unchanged 24 times price to earnings (PE) target – resulting in a marginally higher target price of RM6.91 from RM6.88.
“Overall, we opine that the risk to reward profile of Bursa is relatively balanced at this juncture, seeing that the one-year forward rolling PE is at 23.7 times, which is quite inline with the five-year average multiples of its regional peers of 25.1 times,” it said, retaining its “hold” call on the counter.
