KUCHING: As Bursa Malaysia Bhd (Bursa Malaysia) saw a strong finish to 2014, some analysts believe initial public offerings (IPOs) this year could live up to past performance in spite of volatile market conditions.
Economist David Chong of RHB Research Institute Sdn Bhd (RHB Research) affirmed management’s opinions that the number of IPOs in 2015 could match that of last year, but admitted visibility was lacking at this juncture due to volatile market conditions.
“Nevertheless, Bursa thinks the second half (of 2015) could pan out to be a better half for fund-raising activities,” he outlined in his note to investors yesterday.
On Bursa’s ongoing listing fees, Chong noted that the bourse was still awaiting approval from Securities Commission (SC).
“There was not much update on this front except that Bursa believes that providing various value-added services should help in its cause for a fee revision.”
Ongoing efforts to revitalise the market via new product offerings and marketing campaigns such as the launch of the BURSAMKTPLC should help draw the new and young retail investors, said TA Securities Holdings Bhd (TA Research),
“Supported by vast information made available online coupled with the ability to trade cheaper on the Bursa platform, we believe participation should gradually accelerate especially among the Gen Y market.”
Efforts to improve technology capabilities should also translate into better efficiencies, and hence better earnings, TA Research added.
“Earnings prospects for the derivative segment are further boosted by efforts to offer more tradable alternatives and new derivatives products.
“Proposals by the government under Budget 2015, to list and trade the Malaysian Government securities and Government Investment Issues in Exchange Traded Bond and Sukuk (ETBS) should augur well for trading volumes.”
Thus, MIDF maintained its buy call on Bursa with an revised target price of RM9.04 based on FY15F earnings per share of 38.3sen pegged to its historical five-year average price earnings ratio of 23.6 times.
“Recently, Bursa’s share price has risen slightly. This resulted in the expected total return to fall below our normal 15 per cent threshold for a buy call,” it explained.
“Nevertheless, we maintain our buy call as we view any double-digit total expected return, namely more than 10 per cent, as still attractive under current cautious market sentiment.”
RHB Research’s Chong also reiterated its buy call with a revised target price of RM9.20 based on target 2015 price earnings ratio of 24 times. Yesterday, the stock closed at RM8.20, which is one sen or 0.12 per cent lower than its opening price. A number of 1.08 million shares exchanged hands.