KUALA LUMPUR (Oct 13): CGS-CIMB Securities has maintained its “Hold” rating on Bursa Malaysia Bhd at RM6.21 with a lower target price (TP) of RM6.60 (from RM7) and said equity average daily trading value (ADTV) fell 42.2% year-on-year (y-o-y) to RM1.74 billion in 3Q22, 21.4% lower than the pre-Covid-19 level of RM2.22 billion (average from 1Q17 to 4Q19).

In a note on Wednesday (Oct 12), the research house estimated Bursa’s 3Q22 net profit fell 38.8% y-o-y in 3Q22F, assuming equity income declined 42.2% yoy but derivative income rose 12.1% y-o-y.

“Reiterate Hold as we believe the slide in equity ADTV is priced in, given the decline in its P/E valuation (from 24x in March 2022 to 19.5x in Oct 2022),” it said.

CGS-CIMB said that in addition, the stock is supported by a dividend yield of 4% for FY22F.

“We prefer RHB Bank Bhd for exposure to Malaysia’s financial services sector.

“We believe in the worst-case scenario, Bursa’s share price could fall to RM3.40-4.73 (24-45% downside) if its P/E falls to the troughs of 11x during the Covid-19 outbreak and 15.3x during the global financial crisis,” it said.