Saturday, May 15

LEAP Market to enhance Bursa M’sia’s revenue

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KUCHING: Bursa Malaysia Bhd’s (Bursa Malaysia) Leading Entrepreneur Accelerator Platform (LEAP) will enhance the bourse’s revenue given the high demand and opportunities from the small and medium enterprises (SME) market.

However, analysts believe that this boost will only impact the market at a later stage as it is still too early to deduce the level of revenue that will stream into Bursa Malaysia.

MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) made this observation in a recent note and highlighted that the LEAP market will provide SMEs another avenue to raise funds via a more efficient platform.

“Some of the potential issuers include Cloudaron Pte Ltd, Agrofresh International Group Sdn Bhd, Red Ideas Holdings Sdn Bhd and Plymer Link Sdn Bhd, with the first listing expected by end FY17,” it said.

The research arm foresees the new market will provide enhancement to Bursa Malaysia’s revenue, given the high demand and the opportunities stemming from the high number of SMEs in the local market.

However, at this juncture, MIDF Research believed there would be no impact in earnings from the introduction of the LEAP market, considering that it is still at an early stage.

Meanwhile, on Bursa Malaysia’s first half of financial year 2017 (1HFY17) results, the research team said, earnings came in within expectations.

However, some analysts note that downside risks are mounting for the group in the third quarter of the current year (3Q) while there will be normalisation in 4Q.

Bursa Malaysia’s profit after tax and minority interest (PATAMI) of RM116.2 million for 1HFY17 came in within the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) and consensus’ estimates at 55.6 per cent and 52.3 per cent of respective full year estimates.

On the other hand, the group’s first half of 2017 (1H17) net profit of RM116.2 million made up 51 per cent and 52 per cent of the research arm of Kenanga Investment Bank Bhd’s (Kenanga Research) and the consensus’ full-year estimates, respectively.

While Bursa Malaysia’s first interim dividend of 20 sen was in line, a special dividend of 15 sen was a positive surprise to Kenanga Research.

Previously, the research arm had only expected the group to pay 40 sen of interim dividend for the full year, which was based on a dividend pay-out of 94 per cent (similar of the last year pay-out ratio).

Kenanga Research noted that Bursa Malaysia marked the group’s highest 1H operating revenue since listing, driven by the exceptionally strong volume in securities ADV.

“However, since the end of June towards our date of writing, we noticed that Securities ADVs as well as the trading volumes are already showing signs of weakening with ADV averaging at RM1.8 billion alongside thinner volume of 1.8 billion shares.

“This is in line with our strategist’s view that the 3QCY could be the weakest quarter, supported by our in-house empirical research, which suggests uninspiring upside potential alongside the subsiding buying interest for Bursa Securities in 3Q.

“That said, it may not be all gloom and doom for 2017 as 1H17 stellar performances coupled with normalisation in 4Q17 should be sufficient to make up the shortfall in 3QCY,” the research arm said.

Despite the strong activities in securities trading, the research arm viewed that it will start to taper in 2HFY17 given trading volumes have fallen sharply in July 2017.

“Notably, the trading values in June and July 2017 have been disappointing, declining by 23 per cent month-on-month (m-o-m) and 22.7 per cent m-o-m respectively,” the research arm said.