TA SECURITIES
A MEMBER OF THE TA GROUP
A MEMBER OF THE TA GROUP
RESULTS UPDATE
Wednesday, July 30, 2025
FBMKLCI: 1,523.8
Sector: Finance
THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY*
Bursa Malaysia Berhad
Softer 1HFY25 Results
TP: RM8.15 (+6.4%)
Last Traded: RM7.66
Li Hsia Wong
Tel: +603-2167 9610
liwong@ta.com.my
www.taonline.com.my
Review
- 1HFY25 results came within expectations, as Bursa’s YTD net profit of RM125.5mn accounted for 45% of our full-year forecast. 1H net profit declined by 19.3% YoY due to ongoing market volatilities driven by tariff uncertainties and an outflow of foreign funds, along with higher operating expenses. 1HFY25 ROE declined to 30% vs. 37% a year ago.
- A lower interim dividend of 14 sen (1HFY24: 18 sen) was declared, translating to a 90% payout (1HFY24: 94% payout).
- Sequentially, Bursa’s net profit also slipped by 16.6%. The subdued quarterly performance was within expectations, exacerbated by weak trading activities as the trading velocity softened to 30% from 33% in 1Q. Operating revenue declined by 6.4% QoQ.
- Yearly, Bursa’s 1HFY25 operating revenue fell by 8.1% to RM344.3mn on the back of a decline in trading revenue (-15.5% YoY), while the 7.6% YoY increase non-trading revenue helped cushion the overall weaker revenues. Securities Trading Revenue led the fall, decreasing by a steep 23.9% YoY to RM146.4mn vs RM192.5mn a year ago due to lower Average Daily Value (ADV) and softer velocity. Meanwhile, the Derivatives Trading Revenue grew at a decent pace of 8.1% YoY, attributed to higher Average Daily Contracts (ADC). Bursa Suq Al-Sila’ (BSAS) trading revenue also improved by 14.7% YoY to RM9.6mn from RM8.4mn a year ago.
- Meanwhile, the non-trading revenue segment’s YoY expansion was led by 1) Higher Depository Services (+9.6%) due to an increase in fees from corporate exercises and fees from IPOs and Securities Borrowings and Lending, followed by 2) Member Services & Connectivity (+7.6% YoY), 3) Data Business (+6.4% YoY), and 4) Listing & Issuer Services (+6.0% YoY).
- Total operating expenses climbed by 6.6% YoY to RM189.3mn vs RM177.6mn in 1HFY24 due to increases in 1) staff costs (+2.0% YoY) for higher headcount for new businesses and capacity building, 2) Depreciation and Amortisation (+6.1% YoY), 3) IT Maintenance (+16.4% YoY) due to the commencement of new IT maintenance contracts, 4) Marketing & Development (+9.2% YoY) along with 5) higher administrative expenses (+19.8% YoY). On the back of negative JAWs, Bursa’s cost-to-income ratio stood rose to 53% (1HFY24: 46%).
- By segment, Securities Trading Revenue comprised around 43% of total operating revenue. Total ADV contracted to RM2,457mn vs RM3,270mn in 1HFY24. By segment, retail ADV sank 37.9% to RM455mn (1HFY24: RM733mn), while the ADV by domestic institutions slipped to RM980mn from RM1,434mn. Meanwhile, foreign institutions’ ADV also eased to RM1,022mn (1HFY24: RM1,103mn).
- Trading velocity softened to 32% vs 39% in FY24. QoQ, trading velocity softened to 30% from 33% in 1Q. Elsewhere, the market capitalisation eased to RM1,904bn from RM2,028bn on 30 June 2024. During the quarter, total funds raised declined by 12.5% YoY to RM5.6bn from RM6.4bn a year ago. Funds raised from new listings grew to RM4.0bn (1HFY24: RM2.2bn), while funds raised in the secondary market fell to RM1.6bn (1HFY24: RM4.2bn).
- Bursa reported a total net foreign outflow (TNFO) of RM12.1bn in 1HFY25, compared to a TNFO of RM4.2bn in 2024. The foreign shareholding level (by market cap) eased marginally to 19.0% in June 2025, from 19.7% in December 2024. By trading mix, trading participation by foreign institutions broadened to 42% (FY24: 36%). Comparing trading participation by retailers and institutions, retail investors are still softer at 18% (FY24: 21%).
- In the derivatives market, the ADC of crude palm oil futures (FCPO) rose to 81,119 in 1HFY25 compared with 69,197 in 1HFY24. Meanwhile, the FBMKLCI futures (FKLI) trading slipped YoY to an ADC of 14,799 from 15,270. The trading volatility for FCPO broadened to 24% (from 19% in 1HFY24), while the trading volatility for FKLI rose to 12% (1HFY24: 7%). Combined, the YoY total ADC traded improved to 96,913 contracts compared to 84,927 a year ago. Of this, 84% of total trades were in FCPO and 15% in FKLI. By investor type, foreign institutions now account for 64% of total ADC traded by investors, followed by Retail (20%). The ADC for T+1 After-Hours Trading surged by 37.8% YoY, contributing 15.6% of total ADC (1HFY24: 12.1%).
- On the Islamic market trading activity front, the BSAS trading revenue accounted for around 2.8% of total operating revenue. In 1HFY25, the segment’s ADV rose by some 12.5% YoY to RM48.0bn as the number of trading participants increased to 385 from 365 in 1HFY24. Domestic participants contributed to 80% of total trades. The number of Shariah Compliant Stock (in terms of market capitalisation) stood at around 81%. Meanwhile, the market capitalisation of Shariah-compliant stocks weakened by some 5.1% YoY to RM1,254bn.
Impact
- Aligning our earnings estimates to the 1HFY25 results, we lowered our growth assumptions for FY25/26/27 market cap. With that, our net profit forecasts are adjusted down to RM250.8/253.5/261.1mn from RM278.0/281.9/284.4mn, respectively.
Outlook
- As anticipated, Bursa reported a softer set of 1HFY25 results, weighed down by rising macroeconomic uncertainties stemming from tariff concerns and significant foreign fund outflows YTD. Nevertheless, the group is maintaining its FY25 PBT guidance of RM369-408mn, with the non-trading revenue (NTR) growth to moderate to 5-7% YoY.
- We continue to see potential headwinds in the securities market, along with higher-than-expected overhead expenses driven by ongoing system upgrades, which are likely to add pressure to earnings.
- On a more positive note, management remains upbeat on the outlook for capital market activities, maintaining its target of 60 new IPOs and RM40.2bn in total IPO market capitalisation. However, given the prevailing cautious market sentiment, achieving these targets could prove challenging as businesses may opt to delay their listing plans.
Valuation
- We lower Bursa’s target price (TP) to RM8.15 from RM9.10 on the back of the downward adjustment in our earnings projections. Our TP is based on an implied FY26 PER of around 24.4x and a 3% ESG premium. Given that the potential upside in share price has narrowed due to the downward adjustment in TP, we downgrade Bursa to a HOLD from buy.
- Potential key upside risks to our TP include 1) a compression in risk premiums, 2) further pick-up in trading velocity, 3) a stronger-than-expected improvement in the derivatives market, 4) further improvement in retail sentiments, and 5) the ability to reverse foreign outflows.
Table 1: Earnings Summary (RMmn)
| FYE Dec | 2023 | 2024 | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 616.5 | 784.3 | 731.9 | 790.7 | 863.6 |
| EBITDA | 355.3 | 446.3 | 364.6 | 368.0 | 378.8 |
| EBITDA Margins (%) | 57.6 | 56.9 | 49.8 | 46.5 | 43.9 |
| Pretax profit | 321.5 | 410.4 | 332.3 | 336.0 | 346.2 |
| Net profit | 252.4 | 310.1 | 250.8 | 253.5 | 261.1 |
| EPS (Sen) | 31.2 | 38.3 | 31.0 | 31.3 | 32.3 |
| EPS Growth (%) | 11.4 | 22.9 | (19.1) | 1.1 | 3.0 |
| PER (x) | 24.6 | 20.0 | 24.7 | 24.5 | 23.7 |
| Gross Div (sen) | 29.0 | 44.0 | 28.0 | 29.0 | 30.0 |
| Div Yield (%) | 3.8 | 5.7 | 3.7 | 3.8 | 3.9 |
Table 2: 2QFY25 Results Analysis (RMmn)
| FYE 31 Dec | 2Q FY24 | 1Q FY25 | 2Q FY25 | QOQ | YOY | YTD FY24 | YTD FY25 | YOY |
|---|---|---|---|---|---|---|---|---|
| Operating revenue | 193.8 | 177.7 | 166.7 | (6.2) | (14.0) | 374.5 | 344.3 | (8.1) |
| Other income | 6.1 | 6.7 | 5.9 | (11.8) | (3.3) | 12.6 | 12.6 | (0.0) |
| Total revenue | 199.9 | 184.4 | 172.6 | (6.4) | (13.7) | 387.1 | 357.0 | (7.8) |
| Staff cost | (49.3) | (46.6) | (50.1) | 7.5 | 1.6 | (94.8) | (96.7) | 2.0 |
| Depreciation | (8.7) | (9.1) | (9.2) | 1.1 | 6.5 | (17.3) | (18.4) | 6.1 |
| Other operating expenses | (32.5) | (37.1) | (37.1) | (0.1) | 14.0 | (65.5) | (74.2) | 13.3 |
| Profit before tax | 109.3 | 91.4 | 76.0 | (16.8) | (30.4) | 209.3 | 167.4 | (20.0) |
| Taxation | (28.7) | (23.4) | (19.5) | (16.7) | (32.0) | (54.3) | (42.9) | (21.0) |
| Profit after tax | 80.6 | 68.0 | 56.5 | (16.9) | (29.9) | 154.9 | 124.5 | (19.7) |
| Minority interests | 0.2 | (0.5) | (0.5) | 19.7 | (424.3) | (0.5) | (1.0) | 89.8 |
| Net profit | 80.4 | 68.4 | 57.1 | (16.6) | (29.1) | 155.5 | 125.5 | (19.3) |
| EPS | 9.9 | 8.5 | 7.1 | (16.6) | (29.1) | 19.2 | 15.5 | (19.3) |
Sector Recommendation Guideline
OVERWEIGHT: The total return of the sector, as per our coverage universe, exceeds 12%.
NEUTRAL: The total return of the sector, as per our coverage universe, is within the range of 7% to 12%.
UNDERWEIGHT: The total return of the sector, as per our coverage universe, is lower than 7%.
Stock Recommendation Guideline
BUY: Total return of the stock exceeds 12%.
HOLD: Total return of the stock is within the range of 7% to 12%.
SELL: Total return of the stock is lower than 7%.
Not Rated: The company is not under coverage. The report is for information only.
Total Return of the stock includes expected share price appreciation, adjustment for ESG rating and gross dividend. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting.
Total Return of the sector is market capitalisation weighted average of total return of the stocks in the sector.
ESG Scoring & Guideline
| Environmental | Social | Governance | Average | |
|---|---|---|---|---|
| Scoring | ★★★★ | ★★★★ | ★★★★ | ★★★★ |
| Remark | Bursa demonstrates a strong commitment to fostering ESG practices among listed companies, facilitating sustainable reporting, and promoting accountability through initiatives such as the Bursa Malaysia ESG Reporting Platform and the Centralised Sustainability Intelligence Platform. Efforts like the Mandatory Sustainability Onboarding Program for directors and collaborative initiatives like #financing4ESG MoU have yielded positive results, fostered sustainable financing opportunities and improved ESG credentials of the PLCs. Internally, Bursa is actively reducing its emissions and transitioning to renewable energy sources, with a clear trajectory outlined towards net-zero emissions by 2050. Employee engagement in sustainability practices is encouraged through various initiatives, contributing to YoY reductions in waste and water consumption. | Bursa demonstrates a strong commitment to employee welfare, guided by its DEI Policy, resulting in a well-balanced workforce in terms of ethnicity and gender. While it actively promotes gender equality and fosters an open work culture through transparent communication channels and employee engagement initiatives, there is room for improvement in areas such as female representation in leadership roles and closing the gender pay gap. Additionally, Bursa’s commitment to financial inclusion is evident through initiatives like the LEAP Market Transfer Framework and the expansion of the BSAS platform, providing opportunities for growth to small and mid-sized companies. Furthermore, its dedication to corporate social responsibility is demonstrated through events like the Bursa Bull Charge 2023 and various CSR initiatives, underscoring its commitment to supporting communities and contributing to societal well-being. | Bursa demonstrates robust governance practices, including adherence to various international reporting guidelines and frameworks such as UN SDGs, UNGC principles, MCCG, GRI, SASB, WFE, and TCFD. Notable initiatives include educating stakeholders on sustainable finance, promoting transparent and efficient capital markets, and managing conflicts of interest and technology risks effectively. Bursa’s leadership structure ensures strategic alignment and implementation of sustainability goals, though the absence of KPIs tied to sustainability targets within the management team may limit systematic progress tracking. While showing positive financial indicators like improved ROE and net profit growth, challenges like decreased ADV and market volatility persist. Further data on the effectiveness of initiatives are needed to provide a comprehensive assessment of Bursa’s management capabilities and their contribution to sustainable growth. | |
| ★★★★★ (≥80%): Displayed market leading capabilities in integrating ESG factors in all aspects of operations, management and future directions. | +5% premium to target price | |||
| ★★★★ (60-79%): Above adequate integration of ESG factors into most aspects of operations, management and future directions. | +3% premium to target price | |||
| ★★★ (40-59%): Adequate integration of ESG factors into operations, management and future directions. | No changes to target price | |||
| ★★ (20-39%): Have some integration of ESG factors in operations and management but are insufficient. | -3% discount to target price | |||
| ★ (<20%): Minimal or no integration of ESG factors in operations and management. | -5% discount to target price | |||
Disclaimer
The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein.
As of Wednesday, July 30, 2025, the analyst, Li Hsia Wong, who prepared this report, has interest in the following securities covered in this report: (a) nil
