KUALA LUMPUR, Oct 13 ― CGS-CIMB Securities has cut its FY2023-2024 earnings per share (EPS) estimates for Bursa Malaysia Bhd by nine to 13 per cent, lowering its projected equity average daily trading value (ADTV) by 13 to 19 per cent.
The brokerage said the ADTV in Malaysia’s equity market headed further south in the third quarter 2022 (Q3 2022), falling 22.3 per cent quarter-on-quarter (q-o-q) to RM1.74 billion and declining by 42.2 per cent year-on-year (y-o-y). This marked the fifth consecutive quarter of 40-50 per cent y-o-y decline.
“Moreover, Q3 2022 equity ADTV was 21.4 per cent lower than the pre-Covid-19 level of RM2.22 billion (12-quarter average from the first quarter of 2017 to the fourth quarter of 2019),” it said in a note today.
In deriving its projected FY2023-2024 equity ADTV, CGS-CIMB said it now expected a flattish y-o-y market capitalisation for the equity market in 2023, followed by a two per cent growth in 2024, and market velocity of 27 per cent. It had previously forecast an eight per cent market cap growth per annum for 2023-2024 and market velocity of 29 per cent.
“The changes are to reflect the more cautious sentiment in the market given the potential recession in the United States and Europe,” it said.
Meanwhile, CSG-CIMB estimated Bursa Malaysia’s net profit was RM48.9 million in Q3 2022, down 38.8 per cent y-o-y based on a 42.2 per cent y-o-y fall in equity income, a 12.1 per cent y-o-y rise in derivative income, and a three per cent y-o-y increase in operating cost in the quarter; as well as a tax rate of 28 per cent.
“The EPS cuts lower our target price (TP) for Bursa from RM7.00 to RM6.60 despite the roll-over of the TP to end-2023,” it said.
It maintained a “hold” call on Bursa Malaysia, saying the slide in equity ADTV was priced in given the decline in its valuation. ― Bernama
