FW: AmBank Research - Bursa Malaysia : Softer 3QFY17 earnings in the cards HOLD, 16 Aug 2017

 

STOCK FOCUS OF THE DAY         

Bursa Malaysia : Softer 3QFY17 earnings in the cards                                       HOLD

 

We maintain our HOLD call on Bursa Malaysia (Bursa) with an unchanged fair value of RM9.70/share based on FY18 PE of 23x (5-year historical average PE). We make no changes to our estimates. For 3QFY17, we are seeing a lower daily average trading value (DATV) for equities. Quarter to date (QTD), DATV for equities has tapered to RM1.86bil. This was lower compared to RM2.62bil and RM2.38bil in 2QFY17 and 1QFY17 respectively. YTD, DATV for equities was RM2.37bil.

 

Foreign fund flows have been strong in 1HFY17, cumulating in RM10.7bil. Nevertheless in 3QFY17, foreign fund inflows have declined albeit still positive. 3QFY17 QTD, cumulative inflows were lower at RM571mil. Recall that the effective clearing fee rate (ECFR) rose slightly to 2.34bps in 2QFY17 (1QFY17: 2.32bps). While there have been efforts to raise the percentage of retail trades and improve the ECFR, the mix of trading participation for equity is unlikely to change significantly in the near term. We expect it to be still largely dominated by institutional trades. This will limit its ECFR from rising substantially. Maintain our DATV assumptions for equities of RM2.25bil and RM2.20bil for FY17 and FY18 respectively. We continue to see Bursa as fairly valued, trading at 24.3x FY18 PE.   

 

 

Others :

MRCB : Bags new contracts worth RM409mil                                                       BUY

Hup Seng Industries : Margins on a crunch                                                           HOLD

KL Kepong : Hit by impairments                                                                                 HOLD

KPJ Healthcare : Healthy outlook ahead                                                                 HOLD                    

Petronas Gas : Bracing for impact from new Gas Supply Act                         SELL

 

 

STOCKS ON RADAR

IQ Group, Superlon Holdings, Fajarbaru Builder Group, HSS Engineers

 

 

MACRO STRATEGY

Markets shrug off tough talk; focus on market multiples

 

 

ECONOMIC HIGHLIGHT

UK : BoE policy rate likely to stay for a while

 

 

NEWS HIGHLIGHTS

Maybank : PNB’s next plan for Maybank–creating RM20bil syariah-compliant banking entity

Banking Sector : Commercial banks’ liquidity within acceptable levels

PBBank : Public Bank offers Alipay mobile wallet service

OSKVI : OSK Ventures 2Q earnings jump over 12 times on higher income, net fair value gain