Bursa Malaysia earned 65% of its income from its trading segment in FY24.
PETALING JAYA: The lower average daily value (ADV) of trades on Bursa Malaysia in 2025 compared to last year is leading many analysts to revise their target price (TP) for the exchange operator.
UOB Kay Hian (UOBKH) Research stated although ADV in January has recovered slightly to RM2.66bil from RM2.55bil in the fourth quarter of 2024 (4Q24), it remains well below its 2025 ADV forecast of RM3.65bil.
“Given the uncertain global factors influencing market sentiment, we believe 2025 ADV would likely moderate downwards from the 2024 level of RM3.15bil,” the research house stated in a report following the release of Bursa Malaysia’s 4Q24 results.
As a result, UOBKH Research has revised its financial year 2025 (FY25) and FY26 ADV assumptions for Bursa Malaysia downwards from RM3.6bil and RM3.2bil to RM3bil and RM2.8bil, respectively.
Bursa Malaysia earned 65% of its income from its trading segment in FY24.
“Our 2025 ADV assumption still reflects a ‘risk-on’ environment as our 34% market velocity assumption for 2025 is still the fourth-highest in Bursa’s 20-year history and above its pre-Covid-19 mean of 29%,” the research firm clarified.
With the lower ADV assumptions for FY25 and FY26, UOBKH Research also reduced its earnings forecast for Bursa Malaysia for the two years by 8% and 5%, respectively.
It maintained its “hold” call on Bursa Malaysia but cut its TP to RM8.72 a share (23 times its FY25 price earnings (PE) multiple) from RM9.54 to reflect its lower ADV forecast.
For 4Q24, Bursa Malaysia posted a net profit of RM68.9mil which took its earnings for FY24 to RM310mil, up some 23% year-on-year.
The company declared a final dividend per share of 18 sen, bringing the full-year dividend to 36 sen per share or a 94% payout ratio of earnings. It also declared a special dividend of eight sen per share, bringing the full payout ratio for the year to 136%.
The exchange operator targets a pre-tax profit of RM369mil to RM408mil in FY25 with 60 new listings (55 in 2024). This will have to be achieved with a new chief executive officer in Datuk Fad’l Mohamed as of March 1.
RHB Research, however, maintained its TP for Bursa Malaysia at RM8.80 a share (24.5 times price-to-earnings ratio) with a “neutral” call on the stock. Bursa Malaysia closed 1.89% down to RM8.31 yesterday.
