Bursa Malaysia continued its revenue recovery in 4QFY23 as it grew +7.5%yoy. This resulted in earnings to
come in +21.5%yoy higher, and for FY23, +11.4%yoy. As such, FY23 earnings were within expectations at 100.3% of estimate says MIDF. In addition, it said lower taxes also drove the better earnings which was due to recognition of capital allowances from prior years as deferred tax assets.
The recovery in revenue in 2HFY23 resulted in FY23 revenue posting +2.2%yoy higher. While overall trading revenue -1.0%yoy to RM373.3m, securities trading revenue rose +1.1%yoy due to turnaround in 4QFY23. While ADV (OMT) was relatively flattish, at -0.6%yoy to RM2,056m in FY23, it was due to decline in 9MFY23, which meant there was complete turnaround in 4QFY23 leading to higher securities trading revenue.
Meanwhile, non-trading revenues increased +5.4%yoy to RM219.5m. This was due to revenue growth in market data. Higher OPEX but for growth. OPEX grew marginally by +0.6%yoy to RM294.5.6m but this was due to a one-off reversal of provisions amounting to RM23.6m in 2QFY23. Looking at 4QFY23, OPEX grew +8.8%yoy to RM84.9m. This was mainly due to higher staff costs on higher headcount for new business and capacity building.
The house feels Bursa Malaysia transitioning into a Multi Asset exchange with data and technology to deliver superior Customer Experience will increase value for customers. This includes platforms such as Bursa Carbon Exchange and Bursa Gold Dinar. However, we expect the impact to be more of medium to long term. In the short term, it will continue to be influenced by market vagaries.
MIDF is tweaking FY24/FY25 earnings estimate by +3.1% respectively taking into account potential higher revenue. Recommendation. The house said it saw better trading activities in 2HFY23 on the back the expectation of US Fed rate pause. Going forward, the house expects US rate cuts and domestic factors will influence trading activities hence maintaining a BUY call on the stock with revised TP of RM8.00 (previously RM7.50) pegging the FY24 EPS to a PER of 25x (from 23x) on an improved market outlook.
