SO long as it raked in healthy average daily trading value (ADV), the local bourse will be the one laughing its way to the bank – not investors who have to endure the risk of making bad decisions.
Against such backdrop, Hong Leong Investment Bank (HLIB) Research expects Bursa Malaysia Bhd to reap a bountiful harvest for its financial year (FY) ended 2020.
“Judging from its 4Q 2020 ADV of RM4.83 billion (-15.6% quarter-on-quarter; +169.6% year-on-year) – and barring any unforeseen swings in cost structure – core earnings for the quarter could come in at RM100-105 mil (3Q FY2020: RM121.9 mil),” projected HLIB’s head of research Jeremy Goh in a company update.
“Using the lower end of this estimated range, FY 2020 earnings would end at slightly above RM370 mil, almost doubling from FY2019’s RM189.2 mil.”
If such projection is met, this would surpass HLIB Research’s previous forecast by 11.5% and consensus by 4.9%. Bursa’s 4Q 2020 results are tentatively due for release on Feb 2.
Buoyed by vaccine roll-out to curb the widespread COVID-19 outbreaks, HLIB Research expects 1H 2021 to be very much a “trading market” with investors actively rotating back and forth between recovery plays and gloves.
“As such, despite the high ADV base last year (RM4.21 bil; +118% yoy), it may be possible for this figure to sustain in 2021; ADV for the month-to-date (January 2021) remained robust at RM5.11 bil (December 2020: RM5.0 bil),” justified Goh.
Looking ahead, with more people locked down at home during the current movement control order (MCO 2.0) which HLIB Research expects to be extended a further four weeks at least, retailers may be prompted to enter the market in a more aggressive manner.
“This phenomenon (strange as it may sound) was witnessed during the previous MCO 1.0 where retail participation rose from 27.1% pre-MCO1.0 (January to mid-March) to 32.5% (during MCO 1.0 from mid-March to end-April),” recalled Goh.
All-in, HLIB Research maintained its “buy” rating on Bursa with a target price of RM11.46 (previously RM11.45).
At the close of today’s morning trading, Bursa was up 7 sen or 0.82% to RM8.58 with 606,200 shares traded, thus valuing the company at RM6.94 bil. – Jan 19, 2021
