BURSA Malaysia Bhd is in a business everyone wishes to own – and rightfully so.
Not only that its business is monopolistic in nature but more so given that whether a stock punter betted on the right stock or otherwise, the stock exchange still makes a gain.
Nevertheless, when pitted against market uncertainties in the current COVID-19-ravaged economy, the key question is probably the consistency of its earnings prowess: whether it is one-off or able to sustain future shocks?
MIDF Research reckoned that while Bursa might have a bountiful – and unprecedented – FY2020, replicating that glory may be difficult.
“We believe that the increase in trading interest last year was an exception rather than a ‘new’ normal and will normalise in FY2021,” suggested analyst Imran Yassin Yusof
According to MIDF Research, it will be difficult for the local bourse to sustain the same level of performance in the absence of the volatility swings observed in its FY2020.
This is considering the effect from the COVID-19 pandemic starts to wane once mass vaccination gets underway.
For the 4Q FY2020 period, Bursa saw its net profit ballooned 130% to RM104.85 mil (4Q FY2019: RM45.56 mil) while its revenue climbed 78.4% to RM230,7 mil (4Q FY2019: RM129.33 mil).
For the full year, Bursa’s net profit jumped 144% to RM189.56 mil (FY2019: RM77.75 mil) while its revenue rose 59% to RM798.97 mil (FY2019: RM502.49 mil).
“This include its generous dividends as well. Having said that, we believe that it has already been priced in,” opined Imran.
To re-cap, Bursa has declared a final dividend of 26 sen/share which brings its total dividend for the year to 51sen/share, inclusive of the 8 sen/share special dividend. As such, the payout ratio came to 109%.
“For FY 2021, we are expecting a dividend of 36 sen,” projected the analyst.
All-in, MIDF Research maintained its “neutral” stance on Bursa with an unchanged target price of RM8.90 which is derived from pegging the stock’s FY2021 earnings per share (EPS) to price-to-earnings ratio (PER) of 22 times.
However, RHB Research begged to differ. It remains bullish on Bursa by maintaining its “buy” call with a higher target price of RM10.80 (from RM9.70 previously).
“There were no signs of slowing down in January (>RM5 bil securities average daily value [SADV]),” projected analysts Liew Wai Hoong and Fiona Leong.
“We expect trading in equity securities to remain buoyant, driven by the resurgence in COVID-19 cases and various forms of lockdown (market volatility), and vaccination programme (recovery theme).”
Moreover, the research house also revised upwards Bursa’s FY2021F-2022F earnings by 11% and 2% mainly on higher SADV assumptions (circa RM3.6 bil and circa RM3.3 bil).
At 9.45am, Bursa was up 6 sen or 0.64% at RM9.41 with 419,600 shares traded, thus valuing the company at RM7.59 bil. – Feb 3, 2021
