Bursa's 1H profit within forecast but weak share trade sentiment seen

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KUALA LUMPUR (July 16): Bursa Malaysia Bhd's latest financials came in within analysts' expectation, amid weaker share trade sentiment.

Yesterday, Bursa Malaysia (fundamental: 2.3; valuation: 2.1) said net profit for the second quarter ended June 30, 2015 (2QFY15) grew to RM49.49 million from a year earlier, on higher revenue of RM127.02 million.

For 1HFY15, it registered higher net profit of RM96.54 million from a year earlier, while revenue rose to RM254.11 million.

Today, AmResearch Sdn Bhd said in a note that Bursa Malaysia's 1HFY15 net profit was within market expectation, driven by derivative and Islamic product growth.

AmResearch said Bursa Malaysia's 1HFY15 net profit constituted 47% of AmResearch's and 48% of market forecast.

"Management declared an interim dividend of 16.5 sen, which is equivalent to a payout ratio of 91%. No special dividend is expected in the near term.

"Despite the pared down market sentiment due to the difficult domestic and global environment, Bursa’s performance in 1HFY15 is commendable, slightly buoyed by growth in its derivatives and Islamic products," AmResearch said.

Meanwhile, CIMB Investment Bank Bhd was less optimistic on Bursa Malaysia, amid weaker share trade sentiment.

In a research report to clients today, CIMB said it had also taken into account, Bursa Malaysia's "unattractive valuation".

"We advise investors to stay on the sidelines, in view of weak trading activity in the equity market and unattractive valuation for Bursa. However, we continue to be positive on the outlook for its derivative business," it pointed out.

CIMB maintained its "Hold" call on Bursa Malaysia shares, with an unchanged target price of RM8.50.

For comparison, AmResearch also retained its "hold" recommendation for Bursa Malaysia, with an unchanged fair value of RM8.90.

At 12:30pm, Bursa Malaysia shares fell three sen or 0.4% to RM8.07, for a market capitalisation of RM4.31 billion.
A total of 821,200 shares were traded.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)