This article first appeared in The Edge Financial Daily on February 6, 2018

KUALA LUMPUR: Bursa Malaysia Bhd can look forward to a "slightly higher" number of initial public offerings (IPOs) in 2018 compared with the 13 seen in 2017, said its chief executive officer Datuk Seri Tajuddin Atan.

“The IPO pipeline is doing quite well and we are going to see some big ones coming,” Tajuddin said at a briefing on Bursa Malaysia’s financial results yesterday.

The stock exchange operator recorded a surge of 71.1% in its funds raised from new listings and the secondary market to RM21.9 billion in 2017, while the number of new listings rose from 11 to 13.

Bursa Malaysia posted a 10.2% increase in net profit to RM55.27 million for the fourth quarter ended Dec 31, 2017 (4QFY17), from RM50.17 million a year earlier, due to better performance of the securities market.

Supported by a 27.7% leap in average daily value and a 5% increase in volatility, quarterly earnings per share rose to 10.3 sen from 9.4 sen.

This made 2017 one of the strongest years for the local equity market, where it saw a 9.4% growth in the FBM KLCI and 14% rise year-on-year in total market capitalisation, Tajuddin said.

Meanwhile, revenue for the 4QFY17 grew 14.1% to RM141.2 million, versus RM123.74 million a year ago.

The FY17 net profit climbed 15.2% to RM223.04 million from RM193.62 million in FY16, on the back of revenue that rose 9.9% to RM556.83 million from RM506.78 million a year ago.

The FY17 net profit was the highest since FY07 while operating revenue was the highest since its listing in 2005.

Bursa Malaysia proposed a second interim dividend of 18.5 sen, bringing its full-year dividend to 53.5 sen (including a special dividend) and representing a dividend payout of 93%. Comparatively, it paid a dividend of 34 sen in FY16.

Tajuddin said the group has always exceeded its 75% dividend payout policy although he stressed that the group must remain “as prudent as possible”.

In a note yesterday, CIMB Research said Bursa Malaysia’s net profit was 3% higher than its forecast due to stronger-than-expected equity trading income.

CIMB Research analyst Winson Ng raised his target price on Bursa Malaysia to RM10.40 from RM10 previously as it increased its assumed market velocity in view of the strong equity market trading value in January 2018.

However, Ng maintained his “hold” recommendation on the stock due to concerns over the contraction in derivative income. (see sidebar)

Tajuddin said the bourse was still actively courting retail investors in order to increase liquidity and volatility in the stock market.

In 2017, retail participation on Bursa Malaysia grew 41% year-on-year. The stock market also saw the first total net foreign inflow of funds since 2013 at RM10.8 billion.

Tajuddin said Bursa Malaysia’s capital expenditure planned for 2018 includes improving surveillance and technological systems.

Apart from that, although listing fees remain competitive and would remain at their current level for the time being, “there is room for improvement”, he said.

The bourse operator also has no plans to implement the dual class share structure adopted by the Singapore Exchange Ltd recently.