KUALA LUMPUR (May 2): Shares of Bursa Malaysia Bhd climbed to its highest in more than three years on Thursday after the stock exchange operator reported better-than-expected results that prompted at least two analyst upgrades.

Bursa Malaysia ended at RM7.58, its highest close since April 2021, after gaining 12 sen or 1.6% after more than 2.1 million shares changed hands. The stock had climbed nearly 3% on Thursday. CLSA lifted its recommendation on the stock to 'buy' while Maybank Investment Bank raised its rating to 'hold'.

“We expect good prospect for trading activities in Bursa Malaysia this year from a corporate earnings and valuation point-of-view,” said MIDF Amanah Investment Bank and kept its "buy" call. “We expect robust economic growth and hence corporate earnings.”

Net profit of RM75.03 million for the first quarter (1Q) accounted for 29% of analysts’ full-year estimates. The consensus now calls for Bursa Malaysia to make a net profit of RM265.19 million following latest revisions, according to Bloomberg.

Bursa Malaysia has risen more than 10% and analysts are now questioning further share price gain. There are currently six 'buy' calls and seven 'hold' calls and two 'sell' calls with a median target price of RM7.68.

“We believe the positive landscape could have been priced in,” said Kenanga Investment Bank, which has Bursa on "underperform" rating. “Risk-reward ratios appear fair with the lack of strong medium-term catalysts to deliver earnings surprises cushioned by its solid [return-on-equity] and stable dividend prospects.”

The strong bottomline results in 1Q have been due to strong trading activity that boosted revenue with average daily trading volume surging 37% year-on-year even with fewer trading days while average daily contracts was 18% higher.

“Looking ahead, we expect sequential softening” of average daily volume in the second and third quarters before rebounding in the final quarter, Hong Leong Investment Bank said, flagging risks from delay in rate cuts by the US Federal Reserve.

On its part, Bursa said the company is “well-positioned to continue developing the marketplace and make further progress on our strategic plans” and “cautiously optimistic” that the exchange will meet all five targets for the year.

Bursa is targeting a profit before tax of RM293 million to RM323 million, 5-7% increase in non-trading revenue, and hosting 42 initial public offerings with RM13 billion market capitalisation for the year among its other targets. 

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