KUCHING: Bursa Malaysia Bhd’s (Bursa) financial year 2018 (FY18) earnings are expected to meet analysts’ full year forecast, driven robust securities trading moving forward.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) saw that Bursa’s second quarter of FY18 (2QFY18) profits was already forecast to come in between RM65 million and RM67 million, with growth of around 2.3 per cent year-on-year (y-o-y).
“We attribute the earnings expansion to stronger average daily trading volume (ADTV) traded for securities market (OMT). Overall, we expect earnings to account circa 52.8 per cent of the full year earnings forecasts,” it said in its note yesterday.
This comes as Bursa’s ADTV traded in 2QFY18 has increased to RM2.8 billion, a growth of 6.1 per cent y-o-y.
“The month of May saw the highest ADTV closed at RM3.6 billion, posted an increase of 22.9 per cent y-o-y from the same period last year.
“Notably, subsequent month of June saw ADTV to ease drastically, with average closing below its quarterly mean at RM2.5 billion.
“However, it is noted that this volume in June still posted growth, climbing by 9.5 per cent y-o-y. In terms of securities trading revenue, we estimated it will come in between RM77 million to RM81 million for 2QFY18,” MIDF Research explained.
Aside from that, it noted that revenue from derivatives trading is expected to record marginal growth, by approximately 2.7 per cent y-o-y.
It said: “We attribute this positive variance to strong improvement in FKLI contracts traded, which grew by 38.7 per cent y-o-y.
“While the bulk of the contracts traded were composed of FCPO, we noted that FKLI contracts command higher trade fee. In terms of overall contracts traded, it shrunk by 3.5 per cent y-o-y in 2QFY18.”
All in, MIDF Research said: “We believe that earnings are still able to meet our full year forecast driven by our expectation of robust securities trading moving forward. All things considered, we maintain our FY18 forecast at this juncture.”
As for the bourse’s performance next year, the research team believed the market environment in FY19 should encourage more trading activities, provided that more clarity is available, in terms of major economic direction by the new government.
“However, we believe that this have been factored in by investors. In addition, there is a possible downside risk stemming from external sector namely the US-China trade spat,” it added.