KUALA LUMPUR (Aug 1): Hong Leong Investment Bank (HLIB) Research has maintained its “hold” rating of Bursa Malaysia Bhd at RM6.71, with a slightly higher target price (TP) of RM6.88 (from RM6.74), and said Bursa reported core profit after tax and minority interests of RM105 million for the first half of 2023 (1H2023), down 18% from the same period last year, accounting for 48% of HLIB's and 46% of the consensus full-year forecasts, which is deemed to be in line with expectations.
In a note on Tuesday (Aug 1), the research house said core figures had been adjusted for RM27 million in reversal of prior sales and service tax provisions.
HLIB said the earnings decline was primarily due to a fall in average daily volume (ADV) and average daily contacts, alongside higher operating expenditure, which caused the cost-to-income ratio to spike up from 46.2% to 54.4% in 1H2023.
“We tweak our FY2023/2024/2025 earnings forecasts by +3%/+2%/+1%.
“We maintain 'hold' with a slightly higher TP of RM6.88 (24 times price-earnings for mid-FY2024 earnings per share [for the financial year ending Dec 31, 2024]). While we expect ADV to recover in 2H2023, this has probably been priced in, seeing that MC (market capitalisation)/ADV is now at +1 standard deviation,” it said.