Bursa’s 2Q/1H23 results were above expectations with 1H Profit After Tax And Minority Interest (PATAMI) at 59% of Maybank Investment Bank (Maybank IB)’s estimates.
“The beat was due to a RM27m provision reversal for sales and services tax (SST) on digital services, which is a one off,” said Maybank IB, revising Bursa’s Target Price to RM6.55.
2Q23 PATAMI included a RM27m provision reversal for SST for digital services; the reversal was made after clarification from MoF that the SST, which came into effect on 1 Apr 2022, is not retrospective to Jan 2020.
“The slower 2Q earnings was expected as equity Average Daily Value Traded (ADV) retraced to RM1.9b with a lower trading velocity of 26%,” said Maybank IB.
Higher derivative volume and other income were insufficient to offset the impact on the bottomline. A 15sen 1st interim DPS represents 92% Dividend Payout Ratio.
Bursa is on-track in its 5 Headline KPIs for 2023:
1) pre-tax profit target of RM295m-RM326m,
2) non-trading revenue growth of 5%-7%,
3) 39 IPOs,
4) innovative product launches,
5) lower carbon footprint, targeting >/= 5% reduction in Scope 1 & 2 emissions.
The new Bursa Carbon Exchange (BCX), which is one of its key priorities for 2023, saw its first auction on 16 Mar, and activity is expected to pick up gradually.
Equity ADV has climbed slightly to RM2.06b in Jul 2023. Positively, Bursa’s balance sheet remains strong with a cash balance of RM463m or 57sen/shr.
