Its quarterly net profit climbed to RM76.25 million from RM59.47 million a year ago, attributed to operating expenses falling on a RM27.7 million one-off reversal of provision made for sales and service tax (SST) on digital services.
However, its quarterly revenue dropped 4.8% to RM144.6 million from RM151.89 million.
RHB Investment Bank Bhd (RHB Research) upgraded Bursa Malaysia to “buy” from its previous “neutral” call with a new TP of RM7.50 from RM6.50, a 12% increase.
“As it is a direct beneficiary of improving market sentiment, we are bullish on the counter in tandem with our renewed optimism in the domestic equity market,” said its analysts David Chong and Nabil Thoo.
They believe the favourable exchange rate, undemanding stock valuations, and recent positive news flow are strong catalysts for market activity moving forward.
State polls’ downside risk
RHB Research, however, said the political risk from the state elections presents the largest downside risk to their call. “The upcoming state elections could be a catalyst for short-term market volatility.
“Should our house base case scenario – in which the unity government retains Penang, Selangor and Negeri Sembilan – hold, the subsiding political risk could further improve market sentiment over a longer-term horizon,” the analysts added.
Meanwhile, AmInvestment Bank Bhd (AmInvest) has maintained a “hold” call on Bursa with a revised fair value (FV) of RM7.20 from RM6.50 after rolling over their valuation to FY2024F.
“Our FV is based on FY2024F earnings per share (EPS) pegged to an unchanged price earnings (P/E) of 22x, on par to its five-year historical average,” its analyst Kelvin Ong said.
“Our FY2023F/24F/25F earnings have been tweaked by +1.8%/+3.1%/-0.6% to reflect a slightly higher daily average trading value (DATV) assumptions for the securities market,” he said.
AmInvest has also adjusted its estimates on average daily contracts (ADC) traded for derivatives based on anticipation of lower volatility for crude palm oil futures (FCPO) and FBMKLCI futures ahead.
Foreign fund outflow
The research house said the second quarter saw an outflow of foreign funds from the securities market of RM2.3 billion compared to withdrawals of RM1.9 billion in Q1 2023. For the first six months, the cumulative outflow of foreign funds was RM4.2 billion.
“Nevertheless, in July 2023 (month-to-date until July 28), foreign investors were seen as net buyers of RM1.1 billion cumulatively of local equities,” Ong added.
Meanwhile, Kenanga Investment Bank Bhd (Kenanga Research) maintained its “market perform” call with a TP of RM6.25 based on an unchanged 20x FY2024F price earnings ratio (PER) from RM6.71 previously.
“Risk-reward ratios appear fair with the lack of strong medium-term catalysts to deliver earnings surprises cushioned by its solid return on equity (ROE) and stable dividend prospects,” its analyst Clement Chua said.
“We also anticipate subsiding recessionary signals as well, on delivery of local economic readings which would drive corporate earnings in the coming quarters,” he added.
The lowering of securities trading stamp duty charge to 0.10% from 0.15% at a maximum cap of RM1,000 per contract and the proposed fractionalisation of shares may also generate higher interest in the market.
“Encouragingly, Kenanga Research tracked the July 2023 average daily value (ADV) registering at RM1.92 billion,” he said.
“We leave our FY2023F/FY2024F earnings unchanged. For the H2FY2023 period, we are hopeful that its ADV clocks in at RM2.2 billion, translating to a full-year ADV of RM2.08 billion,” he said.
Bursa Malaysia closed 11 sen or 1.64% higher at RM6.82 today, with a market capitalisation of RM5.52 billion.