Bursa Malaysia Berhad (1818 | BURSA MK) Main | Financial Services
2QFY25 Results Review: Expecting Recovery in 2HCY25
Maintain NEUTRAL. Bursa Malaysia Bhd (Bursa) continue to see moderation to its earnings as trading revenue continued to trend lower in 2QFY25. We had expected that the strong trading activities in FY24 may not be repeatable this year in light of an expected increase in volatility. External situation influenced trading activities caused by the announced US tariff. However, while its 1HFY25 earnings was slightly below our expectations, we are keeping our FY25 earnings forecast for now as we expect that there will be some recovery in trading activities in 2HFY25 as most risk have been priced in, in our opinion. We maintain our NEUTRAL recommendation with an unchanged TP lower of RM7.90 based on pegging FY25 EPS to PER of 22x which is its 2-year average PER.
Slightly below expectations. Bursa 1HFY25 earnings fell -19.2%yoy. This was slightly below our expectation at 43.2% of our full year estimate. Meanwhile, it was at 42.5% consensus’.
Revenue declined, but non-trading revenue continued to grow. Total revenue in 1HFY25 declined -7.8%yoy. It continued to be weighed by lower securities trading revenue in 2QFY25 which fell -33.6%yoy to RM69.6m, resulting in 1HFY25 securities trading revenue to fall -23.9%yoy. For context, securities trading revenue contributed circa 41% to total revenue. However, this was cushioned by increase in other revenue segments, highest being derivatives trading with +8.1%yoy growth. Meanwhile, non-trading revenue grew +7.6% to RM130.5m. This shows that some diversification in its revenue.
Lower trading activities. Average Daily Value (ADV) (OMT) in 1HFY25 fell -24.8%yoy RM2.46b. Main drag was ADV from domestic institution and retail which fell -31.7%yoy to RM980m and -37.9%yoy to RM455m respectively. However, the decline by foreign institution was much less than we expected, down by -7.3%yoy to RM1.02b.
Higher OPEX. OPEX grew +6.6%yoy to RM189.3m. Nevertheless, we noted that staff cost (being the highest contributor) was contained (+2.0%yoy). Main driver for the higher OPEX was higher IT expenses which grew +16.4%yoy to RM23.7m due to IT maintenance.
On the bright side, FY25 IPO target on track. 2QFY25 saw 18 IPOs bringing 1HFY25 IPO count to 32 which seemingly on track of its target listings for FY25.
Maintaining FY25 PBT target. Recall, Bursa is targeting a FY25 PBT of between RM369m and RM408m. While current conditions suggest difficulties in reaching this target, we are not ruling out some recovery in trading activities in 2HFY25 as balance of risks seems to be skewing towards the positive in our opinion. Separately, other targets such as IPO, non-trading revenue growth and reduction in its carbon footprint is on track.
2QFY25 RESULTS SUMMARY
| FYE Dec (RM’m) | 2QFY25 | 2QFY24 | 1QFY25 | YoY Chg | QoQ Chg | 1HFY25 | 1HFY24 | YoY Chg |
|---|---|---|---|---|---|---|---|---|
| Operating revenue | 166.7 | 193.8 | 177.7 | -14.0% | -6.2% | 344.3 | 374.7 | -8.1% |
| Other income | 5.9 | 6.1 | 6.7 | -3.3% | -11.8% | 12.6 | 12.6 | 0.0% |
| Total revenue | 172.6 | 199.9 | 184.4 | -13.7% | -6.4% | 357.0 | 387.3 | -7.8% |
| Staff costs | (50.1) | (49.3) | (46.6) | 1.6% | 7.5% | (96.7) | (94.8) | 2.0% |
| Depreciation and amortisation | (9.2) | (8.7) | (9.1) | 6.5% | 1.1% | (18.4) | (17.3) | 6.1% |
| Other operating expenses | (37.2) | (32.5) | (37.3) | 14.4% | -0.1% | (74.5) | (65.6) | 13.5% |
| EBITDA | 85.2 | 117.9 | 100.6 | -27.7% | -15.3% | 185.9 | 226.6 | -18.0% |
| Pre-tax profit | 76.0 | 109.3 | 91.5 | -30.4% | -16.9% | 167.5 | 209.3 | -19.9% |
| Taxation | (19.5) | (28.7) | (23.4) | -32.0% | -16.7% | (42.9) | (54.3) | -21.0% |
| PATAMI | 57.1 | 80.4 | 68.6 | -29.1% | -16.8% | 125.6 | 155.5 | -19.2% |
| EPS (sen) | 7.1 | 9.9 | 8.5 | -28.3% | -16.5% | 15.6 | 19.2 | -18.8% |
| Key Metric | 2QFY25 | 2QFY24 | 1QFY25 | +/- ppts | +/- ppts | 1HFY25 | 1HFY24 | +/- ppts |
|---|---|---|---|---|---|---|---|---|
| Cost-to-income ratio | 56.0% | 45.3% | 50.4% | 10.7 | 5.5 | 53.1% | 45.9% | 7.2 |
| EBITDA margin | 49.4% | 59.0% | 54.6% | -9.6 | -5.2 | 52.1% | 58.5% | -6.4 |
| PATAMI margin | 33.1% | 40.2% | 37.2% | -7.2 | -4.1 | 35.2% | 40.1% | -5.0 |
| Effective tax rate | 25.6% | 26.2% | 25.6% | -0.6 | 0.1 | 25.6% | 26.0% | -0.3 |
Segments breakdown
| Operating revenue | 2QFY25 | 2QFY24 | 1QFY25 | YoY Chg | QoQ Chg | 1HFY25 | 1HFY24 | YoY Chg |
|---|---|---|---|---|---|---|---|---|
| Securities trading revenue | 69.6 | 104.8 | 76.7 | -33.6% | -9.3% | 146.4 | 192.2 | -23.9% |
| Derivatives trading revenue | 27.3 | 26.5 | 28.9 | 2.7% | -5.7% | 56.1 | 51.9 | 8.1% |
| Bursa Suq Al-Sila (BSAS) | 5.8 | 4.5 | 4.9 | 27.2% | 18.3% | 10.6 | 8.8 | 20.5% |
| Listing and issuer services | 18.8 | 16.8 | 16.3 | 11.8% | 15.1% | 35.1 | 33.1 | 6.0% |
| Depository services | 17.4 | 15.9 | 17.0 | 9.9% | 2.8% | 34.4 | 31.4 | 9.6% |
| Market data | 21.1 | 19.0 | 19.4 | 10.7% | 8.6% | 40.5 | 38.0 | 6.4% |
| Member services and connectivity | 6.7 | 6.2 | 6.6 | 8.2% | 1.4% | 13.3 | 12.4 | 7.6% |
Operating Statistics
| 2QFY25 | 2QFY24 | 1QFY25 | YoY Chg | QoQ Chg | 1HFY25 | 1HFY24 | YoY Chg | |
|---|---|---|---|---|---|---|---|---|
| Total ADV (OMT & DBT) (RM ‘b) | 2.38 | 3.90 | 2.80 | -39.0% | -15.0% | 2.58 | 3.54 | -27.1% |
| Total av. Daily trading volume (OMT & DBT) (billion shares) | 3.17 | 5.18 | 3.37 | -38.8% | -5.9% | 3.27 | 4.89 | -33.1% |
| Velocity (%) | 30.0 | 45.0 | 33.0 | -33.3% | -9.1% | 32.0 | 42.0 | -23.8% |
| No. of IPOs | 18 | 12 | 14 | 50.0% | 28.6% | 32 | 21 | 52.4% |
| Total funds raised – IPO (RM ‘m) | 2,702.7 | 873.2 | 1,265.1 | 209.5% | 113.6% | 3,967.8 | 2,179.9 | 82.0% |
| Total funds raised – Secondary issues (RM ‘m) | 686.7 | 1,966.2 | 900.8 | -65.1% | -23.8% | 1,587.5 | 4,216.1 | -62.3% |
| No. trading days | 60 | 59 | 58 | 1 | 2 | 118 | 119 | -1 |
FINANCIAL SUMMARY
| Profit or Loss (RM’m) | 2023A | 2024A | 2025E | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 616.5 | 784.5 | 740.8 | 757.3 | 774.7 |
| EBITDA | 358.8 | 445.8 | 422.3 | 446.8 | 457.1 |
| PBT | 321.5 | 410.4 | 377.8 | 401.4 | 410.6 |
| Taxation | -70.0 | -101.7 | -88.4 | -93.8 | -95.9 |
| PAT | 251.5 | 308.6 | 289.4 | 307.5 | 314.6 |
| MI | -0.8 | -1.5 | -1.5 | -1.5 | -1.5 |
| PATAMI | 252.3 | 310.1 | 290.9 | 309.0 | 316.2 |
| Core PATAMI | 252.3 | 310.1 | 290.9 | 309.0 | 316.2 |
| EPS (sen) | 31.2 | 38.3 | 35.9 | 38.2 | 39.1 |
| PER (x) | 24.6 | 20.0 | 21.3 | 20.1 | 19.6 |
| DPS (sen) | 29.0 | 44.0 | 34.2 | 36.3 | 37.1 |
| Dividend yield (%) | 3.8 | 5.8 | 4.5 | 4.8 | 4.9 |
| Growth (%) | |||||
| Revenue growth | 2.2 | 27.3 | -5.6 | 2.2 | 2.3 |
| PBT growth | 3.7 | 27.7 | -7.9 | 6.2 | 2.3 |
| PATAMI growth | 11.4 | 22.9 | -6.2 | 6.2 | 2.3 |
| Core PATAMI growth | 11.4 | 22.9 | -6.2 | 6.2 | 2.3 |
MBSB RESEARCH (formerly known as MIDF RESEARCH) is part of MBSB Investment Bank Berhad (formerly known as MIDF Amanah Investment Bank Berhad)
(Bank Pelaburan) (A Participating Organisation of Bursa Malaysia Securities Berhad)
DISCLOSURES AND DISCLAIMER
This report has been prepared by MBSB Investment Bank Berhad (formerly known as MIDF AMANAH INVESTMENT BANK BERHAD) 197501002077 (24878-X). It is for distribution only under such circumstances as may be permitted by applicable law. Readers should be fully aware that this report is for information purposes only. The opinions contained in this report are based on information obtained or derived from sources that we believe are reliable. MBSB INVESTMENT BANK BERHAD (formerly known as MIDF AMANAH INVESTMENT BANK BERHAD) makes no representation or warranty, expressed or implied, as to the accuracy, completeness or reliability of the information contained therein and it should not be relied upon as such. This report is not, and should not be construed as, an offer to buy or sell any securities or other financial instruments. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. All opinions and estimates are subject to change without notice. The research analysts will initiate, update and cease coverage solely at the discretion of MBSB INVESTMENT BANK BERHAD (formerly known as MIDF AMANAH INVESTMENT BANK BERHAD). The directors, employees and representatives of MBSB INVESTMENT BANK BERHAD (formerly known as MIDF AMANAH INVESTMENT BANK BERHAD) may have an interest in any of the securities mentioned and may benefit from the information herein. Members of the MBSB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein This document may not be reproduced, distributed or published in any form or for any purpose.
MBSB INVESTMENT BANK (formerly known MIDF INVESTMENT BANK): GUIDE TO RECOMMENDATIONS
STOCK RECOMMENDATIONS
BUY: Total return is expected to be >10% over the next 12 months.
TRADING BUY: The stock price is expected to rise by >10% within 3 months after a Trading Buy rating has been assigned due to positive news flow.
NEUTRAL: Total return is expected to be between -10% and +10% over the next 12 months.
SELL: Total return is expected to be < -10% over the next 12 months.
TRADING SELL: The stock price is expected to fall by >10% within 3 months after a Trading Sell rating has been assigned due to negative news flow.
SECTOR RECOMMENDATIONS
POSITIVE: The sector is expected to outperform the overall market over the next 12 months.
NEUTRAL: The sector is to perform in line with the overall market over the next 12 months.
NEGATIVE: The sector is expected to underperform the overall market over the next 12 months.
ESG RECOMMENDATIONS* – source Bursa Malaysia and FTSE Russell
☆☆☆☆: Top 25% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
☆☆☆: Top 26-50% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
☆☆: Top 51%- 75% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
☆: Bottom 25% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
* ESG Ratings of PLCs in FBM EMAS that have been assessed by FTSE Russell in accordance with FTSE Russell ESG Ratings Methodology
